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    Exercise Topic 6-Answer

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    The document discusses service cost allocation and apportionment methods. It provides three exercises with multiple parts each that allocate support costs from service departments to production departments using different allocation bases and calculations. The allocations are shown in tables with calculations to derive the allocated amounts. The goal is to appropriately distribute shared costs from supporting departments to operational departments.

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    Exercise Topic 6-Answer

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    The document discusses service cost allocation and apportionment methods. It provides three exercises with multiple parts each that allocate support costs from service departments to production departments using different allocation bases and calculations. The allocations are shown in tables with calculations to derive the allocated amounts. The goal is to appropriately distribute shared costs from supporting departments to operational departments.

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    The document discusses service cost allocation and apportionment methods. It provides three exercises with multiple parts each that allocate support costs from service departments to production departments using different allocation bases and calculations. The allocations are shown in tables with calculations to derive the allocated amounts. The goal is to appropriately distribute shared costs from supporting departments to operational departments.

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    118 views5 pages

    Exercise Topic 6-Answer

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    The document discusses service cost allocation and apportionment methods. It provides three exercises with multiple parts each that allocate support costs from service departments to production departments using different allocation bases and calculations. The allocations are shown in tables with calculations to derive the allocated amounts. The goal is to appropriately distribute shared costs from supporting departments to operational departments.

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    BKAM2013 Management Accounting I

    Topic 6: Service Cost Allocation and Apportionment

    Exercise 1

    (a)

    Service Department Production Department


    Maintenance Grounds Fabricating Assembly
    Support costs RM18,000 RM14,000 RM45,000 RM25,000
    Allocation of (RM18,000) - RM12,000 a RM6,000 b
    Maintenance cost
    Allocation of - (RM14,000) RM6,000 c RM8,000 d
    Grounds cost
    RM0 RM0 RM63,000 RM39,000
    working:
    a = RM18,000 x 12,000 b = RM18,000 x 6,000 c = RM14,000 x 15,000 d = RM14,000 x 20,000
    18,000 18,000 35,000 35,000

    (b)
    Service Department Production Department
    Maintenance Grounds Fabricating Assembly
    Support costs RM18,000 RM14,000 RM45,000 RM25,000
    Allocation of (RM18,000) RM1,385 a RM11,077 b RM5,538 c
    Maintenance cost
    Allocation of - (RM15,385) RM6,594 d RM8,791 e
    Grounds cost
    RM0 RM0 RM62,671 RM39,329
    working:
    a = RM18,000 x 1,500 b = RM18,000 x 12,000 c = RM18,000 x 6,000
    19,500 19,500 19,500
    d = RM15,385 x 15,000 e = RM15,385 x 20,000
    35,000 35,000

    1
    BKAM2013 Management Accounting I

    (c)
    Service Department Production Department
    Maintenance Grounds Fabricating Assembly
    Support costs RM18,000 RM14,000 RM45,000 RM25,000
    Allocation of (RM19,222) RM1,479 a RM11,829 b RM5,914 c
    Maintenance cost
    Allocation of RM1,222 d (RM15,479) RM6,110 e RM8,147 f
    Grounds cost
    RM0 RM0 RM62,939 RM39,061
    working:
    a = RM19,222 x 1,500 b = RM19,222 x 12,000 c = RM19,222 x 6,000
    19,500 19,500 19,500
    d = RM15,479 x 3,000 e = RM15,479 x 15,000 f = RM15,479 x 20,000
    38,000 38,000 38,000

    M = RM18,000 + (3,000/38,000)G
    G = RM14,000 + (1,500/19,500)M

    Therefore,

    M = RM18,000 +(3,000/38,000)(RM14,000 + (1,500/19,500)M)


    M = RM18,000 + RM1,105.263 + 0.006072874M
    M - 0.006072874M = RM19,105.263
    M = RM19,105.263
    0.993927126
    M = RM19,222

    G = RM14,000 + (1,500/19,500) x 19,222


    G = RM14,000 + RM1,478.62
    G = RM15,479

    2
    BKAM2013 Management Accounting I

    Exercise 2

    (a)
    Service Department Production Department
    Personnel Maintenance Machining Assembly
    Support costs RM100,000 RM200,000 RM400,000 RM300,000

    Allocation of (RM100,000) - RM11,111 a RM88,889 b


    Personnel cost
    Allocation of - (RM200,000) RM176,471 c RM23,529 d
    Maintenance cost
    RM0 RM0 RM587,582 RM412,418

    working:
    a = RM100,000 x 5 b = RM100,000 x 40
    45 45
    c = RM200,000 x 7,500 d = RM200,000 x 1,000
    8,500 8,500

    (b)
    Service Department Production Department
    Personnel Maintenance Machining Assembly
    Support costs RM100,000 RM200,000 RM400,000 RM300,000

    Allocation of RM30,000 a (RM200,000) RM150,000 b RM20,000 c


    Maintenance cost
    Allocation of (RM130,000) - RM14,444 d RM115,556 e
    Personnel cost
    RM0 RM0 RM564,444 RM435,556

    working:
    a = RM200,000 x 1,500 b = RM200,000 x 7,500 c = RM200,000 x 1,000
    10,000 10,000 10,000
    d = RM130,000 x 5 e = RM130,000 x 40
    45 45

    3
    BKAM2013 Management Accounting I

    (c)
    Service Department Production Department
    Personnel Maintenance Machining Assembly
    Support costs RM100,000 RM200,000 RM400,000 RM300,000

    Allocation of (RM131,980) RM13,198 a RM13,198 b RM105,584 c


    Personnel cost
    Allocation of RM31,980 d (RM213,198) RM159,899 e RM21,320 f
    Maintenance cost
    RM0 RM0 RM573,097 RM426,904

    working:
    a = RM131,980 x 5 b = RM131,980 x 5 c = RM131,980 x 40
    50 50 50
    d = RM213,198 x 1,500 e = RM213,198 x 7,500 f = RM213,198 x 1,000
    10,000 10,000 10,000

    M = RM200,000 + (5/50)P
    P = RM100,000 + (1,500/10,000)M

    Therefore,

    M = RM200,000 + 0.1(RM100,000 + 0.15M)


    M = RM200,000 + RM10,000 + 0.015M
    M = RM210,000 + 0.015M
    M – 0.015M = RM210,000
    M = RM210,000
    0.985
    M = RM213,198

    P = RM100,000 + 0.15M
    P = RM100,000 + 0.15(RM213,198)
    P = RM100,000 + RM31,980
    P = RM131,980

    Exercise 3

    4
    BKAM2013 Management Accounting I

    Maintenance Personnel Assembly Painting


    Overhead RM200,000 RM60,000 RM43,000 RM74,000
    Alloc. of Maintenance
    (0.2, 0.4, 0.4) (RM210,204) RM42,041 RM84,082 RM84,082
    Alloc. of Personnel
    (0.10, 0.24, 0.66) RM10,204 (RM102,041) RM24,490 RM67,347
    0 0 RM151,572 RM225,429

    Workings:
    M = RM200,000 + 0.1P
    P = RM60,000 + 0.2M

    M = RM200,000 + 0.1(RM60,000 + 0.2M)


    M = RM200,000 + RM6,000 + 0.02M
    M – 0.02M = RM206,000
    M = RM206,000 / 0.98
    M = RM210,204

    P = RM60,000 + 0.2(RM210,204)
    P = RM60,000 + RM42,041
    P = RM102,041

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