Kay and Dee Manufacturing (K+D) has three business lines: • Manufacturing manufacturing of custom truck transmission parts • Chemical Treating: cleaning of old parts They also have four support departments. Major activities of each department are: • Human Resources (HR): Payroll, HR staff, employee services, Union/Management relations. Costs for this service department are allocated based on Headcount. Facility: buildings, building maintenance and related building costs. Costs for this service department are allocated based on area occupied. Main Office (HQ): salaries for the President, VP, and Finance department. Costs for this service department are allocated based on Direct Labour hours. . Repair and Overhead (R+O): Repair of truck transmissions. . . Information Technology (IT): IT costs for the entire organization, including servers. Each part of the organization has different IT needs. The biggest users are HR (for the payroll system) and Chemical Treatment (for a legacy system that runs all of the chemical processing equipment). Other financial information is in Appendix A.
Kay and Dee Manufacturing (K+D) has three business lines: • Manufacturing manufacturing of custom truck transmission parts • Chemical Treating: cleaning of old parts They also have four support departments. Major activities of each department are: • Human Resources (HR): Payroll, HR staff, employee services, Union/Management relations. Costs for this service department are allocated based on Headcount. Facility: buildings, building maintenance and related building costs. Costs for this service department are allocated based on area occupied. Main Office (HQ): salaries for the President, VP, and Finance department. Costs for this service department are allocated based on Direct Labour hours. . Repair and Overhead (R+O): Repair of truck transmissions. . . Information Technology (IT): IT costs for the entire organization, including servers. Each part of the organization has different IT needs. The biggest users are HR (for the payroll system) and Chemical Treatment (for a legacy system that runs all of the chemical processing equipment). Other financial information is in Appendix A.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...
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Question
![Kay and Dee Manufacturing (K+D) has three business lines:
Repair and Overhead (R+O): Repair of truck transmissions.
Manufacturing manufacturing of custom truck transmission parts
Chemical Treating: cleaning of old parts
•
They also have four support departments. Major activities of each department are:
• Human Resources (HR): Payroll, HR staff, employee services, Union/Management relations. Costs for this service
department are allocated based on Headcount.
•
Facility: buildings, building maintenance and related building costs. Costs for this service department are allocated
based on area occupied.
Main Office (HQ): salaries for the President, VP, and Finance department. Costs for this service department are
allocated based on Direct Labour hours.
• Information Technology (IT): IT costs for the entire organization, including servers. Each part of the organization has
different IT needs. The biggest users are HR (for the payroll system) and Chemical Treatment (for a legacy system
that runs all of the chemical processing equipment).
Other financial information is in Appendix A.
REQUIRED:
1. Briefly comment on the cost drivers for the support departments. (ie. Do you think they are appropriate, or can
you recommend something better? Briefly explain your ansiver)
2. Using the Direct Method, allocate overhead costs from the support departments to the business lines.
3.
Using the Step-down method, allocate overhead costs from the support departments to the business lines in the
following order:
1 HQ
2nd Building
3rd IT
4th HR
4. Using the Reciprocal Method, allocate overhead costs from the support departments to the business lines.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4bd2784d-4287-49bd-af4e-8a733cdf6b94%2Fb812b79f-dd90-42df-857f-271ff01a092d%2Fcaym1f_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Kay and Dee Manufacturing (K+D) has three business lines:
Repair and Overhead (R+O): Repair of truck transmissions.
Manufacturing manufacturing of custom truck transmission parts
Chemical Treating: cleaning of old parts
•
They also have four support departments. Major activities of each department are:
• Human Resources (HR): Payroll, HR staff, employee services, Union/Management relations. Costs for this service
department are allocated based on Headcount.
•
Facility: buildings, building maintenance and related building costs. Costs for this service department are allocated
based on area occupied.
Main Office (HQ): salaries for the President, VP, and Finance department. Costs for this service department are
allocated based on Direct Labour hours.
• Information Technology (IT): IT costs for the entire organization, including servers. Each part of the organization has
different IT needs. The biggest users are HR (for the payroll system) and Chemical Treatment (for a legacy system
that runs all of the chemical processing equipment).
Other financial information is in Appendix A.
REQUIRED:
1. Briefly comment on the cost drivers for the support departments. (ie. Do you think they are appropriate, or can
you recommend something better? Briefly explain your ansiver)
2. Using the Direct Method, allocate overhead costs from the support departments to the business lines.
3.
Using the Step-down method, allocate overhead costs from the support departments to the business lines in the
following order:
1 HQ
2nd Building
3rd IT
4th HR
4. Using the Reciprocal Method, allocate overhead costs from the support departments to the business lines.
![Provided information
Summary Information
Direct Labour (hours)
Processing Time
Headcount (employees)
Computers
Floorspace (square feet)
Overhead Costs (in $)
HQ
0
0
10
10
HR
0
第
7
IT
0
0
12
15
Building
4,000
0
页
35
11
Chemical
R+O Manufacturing Treating
200,000
0
180
20
237,422
0
350
400
0
460,902
1,820
3
13,005 2,200
19,600 940,050
28,483
4,901,398 877,199 5,086,492 19,198,554 16,179,253 33,923,386 845,325
1](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4bd2784d-4287-49bd-af4e-8a733cdf6b94%2Fb812b79f-dd90-42df-857f-271ff01a092d%2Fgalvc1x_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Provided information
Summary Information
Direct Labour (hours)
Processing Time
Headcount (employees)
Computers
Floorspace (square feet)
Overhead Costs (in $)
HQ
0
0
10
10
HR
0
第
7
IT
0
0
12
15
Building
4,000
0
页
35
11
Chemical
R+O Manufacturing Treating
200,000
0
180
20
237,422
0
350
400
0
460,902
1,820
3
13,005 2,200
19,600 940,050
28,483
4,901,398 877,199 5,086,492 19,198,554 16,179,253 33,923,386 845,325
1
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