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Departmentalization Quiz

The document contains 3 problems regarding allocating service department costs to production departments using different allocation methods (direct, step, and reciprocal). Problem 1 asks what the service department cost allocated to Department B is under each method, and what the total cost of Department A is. Problem 2 asks about allocating estimated overhead costs from service departments to production departments based on number of employees, using direct and step methods. Problem 3 asks what the total allocated service department costs to PP2 are using the reciprocal method.

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Pamela Galang
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810 views1 page

Departmentalization Quiz

The document contains 3 problems regarding allocating service department costs to production departments using different allocation methods (direct, step, and reciprocal). Problem 1 asks what the service department cost allocated to Department B is under each method, and what the total cost of Department A is. Problem 2 asks about allocating estimated overhead costs from service departments to production departments based on number of employees, using direct and step methods. Problem 3 asks what the total allocated service department costs to PP2 are using the reciprocal method.

Uploaded by

Pamela Galang
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PROBLEM 1

Pomelo Company has two service departments (1 and 2) and two operating (producing) departments ( A and B). Data provided are as follows:
Service Departments Producing Departments
1 2 A B
Direct costs P150 P300 P5,000 P6,000
Services performed by Department 1 40% 40% 20%
Services performed by Department 2 20% 70% 10%

Assuming the direct method is used to allocate service department costs:


1. What is the service department cost allocated to Department B?
a. P50.00 b. P60.00 c. P87.50 d. P150.00
2. What is the total cost of department A?
a. P5,000.00 b. P5,295.83 c. P5,362.50 d. P5,270.00
Assuming the step method is used to allocate service department costs:
1. What is the service department costs allocated to Department B?
a. P60 b. P100 c. P75 d. P66
2. What is the total cost of Department A?
a. P5,375 b. P5,350 c. P5,075 d. P5,270
Assuming the reciprocal method is used to allocate service department costs:
1. What is the service department cost allocated to Department B (rounded)?
a. P60 b. P75 c. P84.78 d. P135
2. What is the total cost of Department A (rounded)?
a. P5,365 b. P5,087 c. P5,375 d. P5,085

PROBLEM 2
J & P tool Inc., has three service departments that support the production area. Outlined below is the estimated overhead by department for the
upcoming year.
Service Departments Estimated overhead Number of employees
Receiving P25,000 2
Repair 35,000 2
Tool 10,000 1
Producing Department
Assembly 25
Boiling 12
The Repair Department supports the greatest of departments, followed by the Tool Department. Overhead cost is allocated to departments based upon
the number of employees.
1. Using the direct method of allocation, how much of the repair department’s overhead will be allocated to the Tool Department?
a. Zero b. P875 c. P7,000 d. P11,667
2. Using the step down method of allocation, the allocation from the Repair Department to the Tool Department would be:
a. Zero b.P875 c. P7 ,000 d. P11,667

PROBLEM 3
J and J Company has two service departments (SS1 and SS2) and two production departments (PP1 and PP2). Departmental data for January were as
follows:
SS1 SS2
Cost incurred P27,000 P18,000
Services provided to:
SS1 - 20%
SS2 10% -
PP1 50% 30%
PP2 40% 50%
What is the total allocated service departmental costs to PP2 if the company uses the reciprocal method of allocating the service department costs?
(Round computation to the nearest whole number).
a. P19,800 b. P21,949 c. P22,500 d. P23,051

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