7 1 CHAPTER Support Department Cost Allocation Objectives

7 -1 CHAPTER Support Department Cost Allocation

Objectives 7 -2 After studying this chapter, you should be able to: 1. Describe the difference between support departments and producing departments. 2. Calculate single and multiple changing rates for a support department. 3. Allocate support-department costs to producing departments using the direct, sequential, and reciprocal methods. 4. Calculate departmental overhead rates.

7 -3 Types of Departments Producing departments secara langsung bertanggung jawab pada pembuatan produk atau jasa yang dijual kepelanggan

Types of Departments 7 -4 Supporting departments menyediakan pelayanan pendukung yang diperlukan oleh departemenpermesinan, produksi Pemeliharaan, pertamanan, rumah tangga, personalia dan penyimpanan

Langkah-langkah dalam pengalokasian biaya dept pendukung ke dept produksi 1. Membagi perusahaan kedalam departemen 2. Mengklasifikasikan tiap departemen sebagai pendukung atau departemen produksi 3. Menelusuri semua biaya overhead perusahaan di departemen pendukung atau departemen produksi 4. Mengalokasikan biaya dept pendukung ke dept produksi Continued 7 -5

Langkah-langkah dalam pengalokasian biaya dept pendukung ke dept produksi 5. Menghitung tarif overhead yang ditentukan terlebih dahulu untuk departemen produksi 6. Mengalokasikan biaya overhead ke tiap unit produk melalui tarif overhead yang ditentukan terlebih dahulu 7 -6

Examples of Cost Drivers for Support Departments Support Department Possible Driver Accounting Number of transactions Cafeteria Number of employees Engineering Number of change orders Maintenance Machine hours; maintenance hours Payroll Number of employees Personnel Number of employees, firings, layoffs, new hires 7 -7

Tujuan Alokasi 7 -8 1. Memperoleh harga yang wajar dan saling menguntungkan 2. Menghitung tingkat laba lini produk 3. Memperkirakan pengaruh ekonomi dari perencanan dan pengendalian 4. Menilai persediaan 5. Memotivasi para manajer

7 -9 Note Objective 5: Allocations can be used to motivate managers.

7 -10 AND Fixed costs………………$26, 190 Variable costs…. . $0. 023 per page

A Single Charge Rate 7 -11 Estimated usage (in pages) by the three producing departments is as follows: Audit Department 94, 500 Tax Department 67, 500 MAS Department 108, 000 Total 270, 000 Variable cost: 270, 000 x $0. 023 $ 6, 210 Fixed cost 26, 190 Total cost for 270, 000 pages $32, 400 Average cost ($32, 400 ÷ 270, 000)$0. 12 per page

A Single Charge Rate 7 -12 Total Photocopying Department Charge Number of Charge Total = x Charges Pages per Page Audit Department 92, 000 $0. 12 $11, 040 Tax Department 65, 000 0. 12 7, 800 MAS Department 115, 000 0. 12 13, 800 Total 272, 000 $32, 640

Multiple Charging Rates Peak Proportion Number of Peak of Pages Usage Audit Tax MAS 7 -13 Amount Total Allocated to Fixed Each Costs Department 7, 875 0. 20 $26, 190 $ 5, 238 22, 500 0. 57 26, 190 14, 928 9, 000 0. 23 26, 190 6, 024 Total 39, 375 $26, 190

Multiple Charging Rates 7 -14 Fixed Number of Total = + Cost Pages x Charges Allocation $0. 023 Audit department $2, 116 $5, 238 $7, 354 Tax department 1, 495 14, 928 16, 423 MAS department 2, 645 6, 024 8, 669 $6, 256 $26, 190 $32, 446 Total

Budgeted Versus Actual Usage 7 -15 Ketika kita mengalokasikan biaya dept pendukung kedept produksi, seharusnya kita mengalokasikan biaya aktual atau biaya yang dianggarkan?

7 -16 Budgeted Versus Actual Usage Biaya yang dianggarkan

7 -17 Budgeted Versus Actual Usage Prinsip umum evaluasi kinerja adalah para menajer seharusnya tidak bertanggung jawab atas biaya atau aktivitas yang tidak dikendalikan oleh mereka

7 -18 Use of Budgeted Data for. Product Costing Number of Copies Audit Department 94, 500 Total Allocated x Rate = Charges $0. 12 $11, 340 67, 500 0. 12 8, 100 MAS Department 108, 000 0. 12 12, 960 Tax Department Total 270, 000 $32, 400

Use of Actual Data for Performance Evaluation Purposes 7 -19 Number of x Copies Total Allocated = Rate Charges Audit department 92, 000 $0. 12 $11, 040 Tax department 65, 000 0. 12 7, 800 MAS department 115, 000 0. 12 Total 272, 000 13, 800 $32, 640

Memilih metode alokasi biaya departemen pendukung Ada tiga metode untuk mengalokasikan biaya depart. pendukung ke departemen produksi: § The Direct Method (metode alokasi langsung) § The Sequential Method (metode alokasi berurutan) § The Reciprocal Method (metode alokasi timbal balik) 7 -20

Data for Illustrating Allocation Methods Support Departments 7 -21 Producing Departments Power Maintenance Direct costs* $250, 000 $160, 000 Grinding Assembly $100, 000 $60, 000 Normal activity: Kilowatt-hours --- Maintenance hours 1, 000 200, 000 --- 600, 000 200, 000 4, 500 *Pada dept produksi biaya langsung hanya berhubungan dengan biaya overhead yang secara langsung dapat ditelusuri ke dept tersebut

7 -22 Direct Method of Allocation Power Maintenance Grinding Assembly

Direct Method of Allocation Power 7 -23 Maintenance Grinding Assembly

STEP 1—CALCULATE ALLOCATION RATIOSGrinding Assembly 7 -24 600, 000 Power = (600, 000 + 200, 000) 200, 000 (600, 000 + 200, 000) 4, 500 Maintenance = (4, 500 + 4, 500) 4, 500 (4, 500 + 4, 500) Direct Method 0. 75 0. 25 0. 50

STEP 2—ALLOCATE SUPPORTS DEPARTMENT 7 -25 COSTS USING THE ALLOCATION RATIOS Support Departments Producing Departments Power Maintenance Grading Assembly Direct costs $250, 000 $160, 000 $100, 000 $60, 000 Power a Maintenance a b -250, 000 b --- 187, 500 62, 500 160, 000 80, 000 $0 $0 $367, 500 $202, 500 0. 75 x $250, 000 = $187, 500; 0. 25 x $250, 000 = $62, 500 0. 50 x $160, 000 = $80, 000 Direct Method

7 -26 Sequential Method of Allocation STEP 1: Rank service departments 1 Power 2 Maintenance

7 -27 Sequential Method of Allocation Power STEP 2 Maintenance Grinding Assembly

Sequential Method of Allocation Maintenance STEP 2 Grinding Assembly 7 -28

7 -29 STEP 1 -CALCULATE ALLOCATION RATIOS Maint Grinding Assembly 200, 000 Power = (200, 000+600, 000+200, 000) 0. 20 600, 000 (200, 000 + 600, 000 + 200, 000) Sequential Method 0. 20 0. 60

7 -30 STEP 1—CALCULATE ALLOCATION RATIOS Maint. Grinding Assembly Mainte = 4, 500 nance (4, 500 + 4, 500) 0. 50 4, 500 (4, 500 + 4, 500) Sequential Method 0. 50

STEP 2—ALLOCATE SUPPORT DEPARTMENT COSTS USING 7 -31 THE ALLOCATION RATIOS Support Departments Producing Departments Power Maintenance Grading Assembly Direct costs Power Maintenance $250, 000 a $160, 000 $100, 000 $60, 000 -250, 000 150, 000 --- 210, 000 105, 000 b $0 $0 $355, 000 $215, 000 a 0. 20 x $250, 000 = $50, 000; 0. 60 x $250, 000 = $150, 000; b 0. 20 x $250, 000 = $50, 000 0. 50 x $210, 000 = $105, 000 Sequential Method

7 -32 Metode alokasi timbal balik mengakui semua interaksi antar departemen pendukung

Reciprocal Method 7 -33 Support Departments Producing Departments Power Maintenance Grading Assembly Direct costs: Normal activity: Kilowatt-hours --200, 000 600, 000 200, 000 Maintenance hours 1, 000 --4, 500 Proportion of Output Used by Departments Power Maintenance Grading Assembly Allocated ratios: Power Maintenance --- 0. 20 0. 60 0. 20 0. 10 --- 0. 45

7 -34 M = Direct costs + Share of Power’s costs M = $160, 000 + $50, 000 + 0. 02 M 0. 98 M = $210, 000 M = $214, 286

7 -35 P = Direct cost + Share of Maintenance’s cost P = $250, 000 + 0. 1($214, 286) P = $250, 000 + $21, 429 P = $271, 429

ALLOCATE SUPPORT DEPARTMENT COSTS USING THE 7 -36 ALLOCATION RATIOS AND THE SUPPORT-DEPARTMENT COSTS FROM RECIPROCAL METHODS EQUATIONS Support Departments Producing Departments Power Maintenance Grading Assembly Direct costs $250, 000 $160, 000 $100, 000 Power -271, 429 54, 286 162, 857 54, 286 271, 429 -214, 286 96, 429 $0 $0 $359, 286 Maintenance Total from Slide 7 -35 from Slide 7 -34 $60, 000 $210, 715

Comparison of Support Department Cost Allocations 7 -37 Using the Direct, Sequential, and Reciprocal Methods Direct Method Grinding Assembly Direct costs $100, 000 Allocated from power 187, 500 Allocated from maintenance Total cost $60, 000 80, 000 $367, 500 Click on button to compare with sequential method Click on button to compare with reciprocal method 62, 500 80, 000 $202, 500 Return to show

Comparison of Support Department Cost Allocations 7 -38 Using the Direct, Sequential, and Reciprocal Methods Direct costs Sequential Method Grinding Assembly $100, 000 $60, 000 Allocated from power 150, 000 Allocated from maintenance 105, 000 Total cost $355, 000 $215, 000 Return Click on button to compare with direct method to Click on button to compare with reciprocal method show

Comparison of Support Department Cost Allocations 7 -39 Using the Direct, Sequential, and Reciprocal Methods Direct costs Reciprocal Method Grinding Assembly $100, 000 $60, 000 162, 857 54, 286 Allocated from maintenance 96, 429 Allocated from power Total cost $359, 286 $210, 715 Click on button to compare with direct method Return Click on button to compare with sequential method to show

Departmental Overhead Rates 7 -40 The overhead rate for the grinding department is computed as follows (assuming the normal level of activity is 71, 000 MH): OH rate = $355, 000 71, 000 = $5 per MH The overhead rate for the assembly department is computed as follows (assuming the normal level of activity is 107, 500 DLH): OH rate = $215, 000 107, 500 = $2 per DLH

Product Unit Cost A product requires two machine hours of grinding per unit and one hour of assembly. Overhead cost assigned: 2 x $5 1 x $2 Total assigned $10 2 $12 7 -41

7 -42 Chapter Seven The End