What formula to determine the total maintenance cost

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Reference no: EM132628965

Hartwell Company distributes the service department overhead costs directly to producing departments without allocation to the other service departments. Information for the month of January is presented as follows:

                                                                                   Maintenance                Utilities

Overhead costs incurred............................... P18, 700                    P9, 000

Service provided to:

Maintenance department..........................              -                      10%

Utilities department................................            20%                      -

Producing department A...........................           40%                     30%

Producing department B...........................           40%                      60%

Problem 1: The amount of utilities department costs distributed to producing department B for January should be___.

a. 3,600

b. 4,500

c. 5,400

d. 6,000

Problem 2: Assume instead that Hartwell Company distributes the service departments' overhead costs based on the step-down method. Which of the following methods is true?

a. Allocate maintenance expense to departments A and B

b. Allocate maintenance expense to departments A and B and the utilities department.

c. Allocate utilities expense to the maintenance department and departments A and B.

d. None of the above.

Problem 3: under the step-down method, how much of Hartwell's utilities department cost is allocated between departments A and B?

a. 9,900

b. 10,800

c. 12,740

d. 27,700

Problem 4: Assume that Hartwell Company distributes service department overhead costs based on the reciprocal method, what would be the formula to determine the total maintenance costs?

a. M=P18,700+ .10U

b. M = P9.000 + -20U

c. M= P18,700+.30U+.40A+.40B

d. M = P27.700 + .40A + .408

Problem 5: Hartwell Company distributes utilities department overhead costs based on the reciprocal method, what would be the formula to determine the total utilities costs?

a. U=P18,700+.10M

b. U = P9,000 + .20M

c. U = P18,700 + .30M + .40H+.40B

d. U = P27,700 + .40A + .40B

Reference no: EM132628965

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