Exercise Topic 6-Answer

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BKAM2013 Management Accounting I

Topic 6: Service Cost Allocation and Apportionment

Exercise 1

(a)

Service Department Production Department


Maintenance Grounds Fabricating Assembly
Support costs RM18,000 RM14,000 RM45,000 RM25,000
Allocation of (RM18,000) - RM12,000 a RM6,000 b
Maintenance cost
Allocation of - (RM14,000) RM6,000 c RM8,000 d
Grounds cost
RM0 RM0 RM63,000 RM39,000
working:
a = RM18,000 x 12,000 b = RM18,000 x 6,000 c = RM14,000 x 15,000 d = RM14,000 x 20,000
18,000 18,000 35,000 35,000

(b)
Service Department Production Department
Maintenance Grounds Fabricating Assembly
Support costs RM18,000 RM14,000 RM45,000 RM25,000
Allocation of (RM18,000) RM1,385 a RM11,077 b RM5,538 c
Maintenance cost
Allocation of - (RM15,385) RM6,594 d RM8,791 e
Grounds cost
RM0 RM0 RM62,671 RM39,329
working:
a = RM18,000 x 1,500 b = RM18,000 x 12,000 c = RM18,000 x 6,000
19,500 19,500 19,500
d = RM15,385 x 15,000 e = RM15,385 x 20,000
35,000 35,000

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BKAM2013 Management Accounting I

(c)
Service Department Production Department
Maintenance Grounds Fabricating Assembly
Support costs RM18,000 RM14,000 RM45,000 RM25,000
Allocation of (RM19,222) RM1,479 a RM11,829 b RM5,914 c
Maintenance cost
Allocation of RM1,222 d (RM15,479) RM6,110 e RM8,147 f
Grounds cost
RM0 RM0 RM62,939 RM39,061
working:
a = RM19,222 x 1,500 b = RM19,222 x 12,000 c = RM19,222 x 6,000
19,500 19,500 19,500
d = RM15,479 x 3,000 e = RM15,479 x 15,000 f = RM15,479 x 20,000
38,000 38,000 38,000

M = RM18,000 + (3,000/38,000)G
G = RM14,000 + (1,500/19,500)M

Therefore,

M = RM18,000 +(3,000/38,000)(RM14,000 + (1,500/19,500)M)


M = RM18,000 + RM1,105.263 + 0.006072874M
M - 0.006072874M = RM19,105.263
M = RM19,105.263
0.993927126
M = RM19,222

G = RM14,000 + (1,500/19,500) x 19,222


G = RM14,000 + RM1,478.62
G = RM15,479

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BKAM2013 Management Accounting I

Exercise 2

(a)
Service Department Production Department
Personnel Maintenance Machining Assembly
Support costs RM100,000 RM200,000 RM400,000 RM300,000

Allocation of (RM100,000) - RM11,111 a RM88,889 b


Personnel cost
Allocation of - (RM200,000) RM176,471 c RM23,529 d
Maintenance cost
RM0 RM0 RM587,582 RM412,418

working:
a = RM100,000 x 5 b = RM100,000 x 40
45 45
c = RM200,000 x 7,500 d = RM200,000 x 1,000
8,500 8,500

(b)
Service Department Production Department
Personnel Maintenance Machining Assembly
Support costs RM100,000 RM200,000 RM400,000 RM300,000

Allocation of RM30,000 a (RM200,000) RM150,000 b RM20,000 c


Maintenance cost
Allocation of (RM130,000) - RM14,444 d RM115,556 e
Personnel cost
RM0 RM0 RM564,444 RM435,556

working:
a = RM200,000 x 1,500 b = RM200,000 x 7,500 c = RM200,000 x 1,000
10,000 10,000 10,000
d = RM130,000 x 5 e = RM130,000 x 40
45 45

3
BKAM2013 Management Accounting I

(c)
Service Department Production Department
Personnel Maintenance Machining Assembly
Support costs RM100,000 RM200,000 RM400,000 RM300,000

Allocation of (RM131,980) RM13,198 a RM13,198 b RM105,584 c


Personnel cost
Allocation of RM31,980 d (RM213,198) RM159,899 e RM21,320 f
Maintenance cost
RM0 RM0 RM573,097 RM426,904

working:
a = RM131,980 x 5 b = RM131,980 x 5 c = RM131,980 x 40
50 50 50
d = RM213,198 x 1,500 e = RM213,198 x 7,500 f = RM213,198 x 1,000
10,000 10,000 10,000

M = RM200,000 + (5/50)P
P = RM100,000 + (1,500/10,000)M

Therefore,

M = RM200,000 + 0.1(RM100,000 + 0.15M)


M = RM200,000 + RM10,000 + 0.015M
M = RM210,000 + 0.015M
M – 0.015M = RM210,000
M = RM210,000
0.985
M = RM213,198

P = RM100,000 + 0.15M
P = RM100,000 + 0.15(RM213,198)
P = RM100,000 + RM31,980
P = RM131,980

Exercise 3

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BKAM2013 Management Accounting I

Maintenance Personnel Assembly Painting


Overhead RM200,000 RM60,000 RM43,000 RM74,000
Alloc. of Maintenance
(0.2, 0.4, 0.4) (RM210,204) RM42,041 RM84,082 RM84,082
Alloc. of Personnel
(0.10, 0.24, 0.66) RM10,204 (RM102,041) RM24,490 RM67,347
0 0 RM151,572 RM225,429

Workings:
M = RM200,000 + 0.1P
P = RM60,000 + 0.2M

M = RM200,000 + 0.1(RM60,000 + 0.2M)


M = RM200,000 + RM6,000 + 0.02M
M – 0.02M = RM206,000
M = RM206,000 / 0.98
M = RM210,204

P = RM60,000 + 0.2(RM210,204)
P = RM60,000 + RM42,041
P = RM102,041

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