Determine the amount of support department costs

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Reference no: EM132371589

Financial Management for Engineers Assignment -

Part A -

Wollongong Credit Centre (WCC) provides loan to two types of clients; individuals and corporate client. WCC has two support departments: IT Support (IT) and Admin Support (Admin) department. In addition, WCC has two operation departments to deal with its two distinct clients named Individual clients and corporate clients department. For the next quarter, the following cost record including budgeted cost of support department to be allocated to operating department is as follows:

	Support Department		Operation Department		Total
	IT	Admin	Individual	Corporate	Total
Budgeted costs $	1,200,000	1,500,000	7,500,000	8,000,000	18,200,000
Support work supplied by IT		25%	40%	35%	100%
Support work supplied by Admin	10%		30%	60%	100%

Required (show your workings):

(a) Using the direct method, determine the amount of support department costs will be allocated to the two operation departments.

(b) Using the step-down method, determine the amount of support department costs will be allocated to the two operation departments if the Admin department with the highest amount is allocated first.

Part B -

Make-u-Up Ltd produces and sells women make-up and skin care products. The information about both products is as follows:

	Make-up	Skin care
Selling price	$65	$85
Variable costs	$42	$57

Quincy, the manager of Make-u-Up Ltd found that sales report shows in average the company sells 35 units of make-up and 65 units of skin care. The total fixed costs are $38 220.

Required (show your working):

(a) Calculate the estimated break-even point in units and in sales dollars of make-up.

(b) Calculate the estimated break-even point in units and in sales dollars of skin care.

Reference no: EM132371589

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