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cost accounting

Q 1 Fadel, Inc. allocates engineering costs on the basis of the supervisors time and administration costs on the basis of the number of employees.

The following data have been collected:

?Support Departments?Operating Departments

?Engineering?Administration?Operating 1?Operating 2

Departmentcosts?$25,000?$15,000?$200,000?$350,000

Number of employees?15?10?300?450

Engineering supervisors time?30 hours?15 hours?35 hours?20 hours

Use the direct method to allocate support department costs to the different departments.

Q 2 Fahd Compagny is allocating support department costs to operating departments.

Actual support costs and allocation base information for the two support departments is shown below.

The costs of support department S1 are allocated based on the number of service calls made, and the costs of support department S2 are allocated based on square feet.

?Support Departments?Operating Departments

?S1?S2?O1?O2

Support costs?$80,000?$28,000?----?----

Allocation bases:????

Service calls?2?4?10?5

Square feet?6,000?3,000?23,000?18,000

?Using the reciprocal method:

a.?Determine the equations related to the reciprocal exchange of service between S1 and S2 costs

b.?Determine the amount of cost allocated from S2 to S1

c.?Determine the amount of cost allocated from S1 to O2

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