P4-5 Cake Products Inc, is divided into five departments, mixing, blending, finishing, factory office and building maintenance.

P4-5 Cake Products Inc, is divided into five departments, mixing, blending, finishing, factory office and building maintenance. The first three departments are engaged in production work. Factory Office and Building Maintenance are service departments. During the month of June, the following factory overhead was incurred for the various departments:              

 

mixing $21,000                       factory office $9,000

Blending $18,000                   building maintenance $6,400

finishing $25,000  

 

The bases for distributing service department expenses to the other departments follow:

Building maintenance - on the basis of floor space occupied by the other departments as follows: mixing 10,000 sqft, blending $4,500 sqft, finishing 10,500 sqft and factory office 7,000 sq ft. 

Factory office - on the basis of number of employees as follows : mixing 30, blending 20 and finishing 50 

 

Prepare schedules showing the distribution of the service departments expenses for the following: 
1. The direct distribution method                  
2. The sequential distribution method in the order of number of other departments served.

 

SOLUTION PREVIEW

Problem 4-5

1.  Schedule for Distribution of Service Department Costs - Direct Method

Description	Bldg. Maint.	Factory Office	Mixing	Blending	Finishing	Total
Total from factory overhead analysis sheets…	6,400	9,000	21,000	18,000	25,000	79,400
Build. Maint distribution – (Basis sq. ft. floor space)
Mixing --			2,560			2,560
Blending --				1,152		1,152
Finishing --					2,688	2,688

 

File name: P4-5-Cake-Products-Inc.xls File type: application/vnd.ms-excel Price: $8