Answer:
Total Service Costs Molding :350031.22 Painting: 205081. 46
Explanation:
Given Data
<u><em>Model, Inc.</em></u>
<u><em> Service </em></u>
<u><em> Administration, Accounting, Maintenance</em></u>
<u><em></em></u>
Costs $269,000, $402,000, $199,000,
Building area 12,000 63,000 69,300
Employees 44 14 22
Equipment value
(in thousands) $ 177.00 $ 236.00 $ 17.50
<u> Production </u>
<u> Molding Painting </u>
Costs
Direct Materials $242,500 $211,000
Direct Labor $327,500 $219,000
Overheads $105,000 $82,500
Building area 441,000 56,700
Employees 66 88
Equipment value
(in thousands) $ 118.00 $ 59.00
<em><u>First we find the activity rates for each cost using total cost driver except self usage</u></em>
1) Maintenance $ 199,000
Equipment Value= 177 + 236+ 118+ 59= 590 ( in thousands) ( all but maintenance itself )
Maintenance per equipment = 199,000/590,000= 0.3373 per equipment
2) Accounting,= $402,000,
Employees=44 + 22 + 66 + 88 = 220
Accounting per Employee= $402,000,/220= 1827.27 per Employee
3) Administration= $269,000
Building area =63,000 +69,300 +441,000+ 56,700= 630,000
Administration per square footage= 269,000/ 630,000= 0.4269= 0.43 per square
<u><em>Then we multiply the rates to find the service costs allocated.</em></u>
Production
Molding Painting
Costs
Direct Materials $242,500 $211,000
Direct Labor $327,500 $219,000
Overheads $105,000 $82,500
<u>Service Cost Allocated</u>
Building area 0.43*441,000 0.43* 56,700
= 189630 =24381
Employees 66* 1827.27 88 *1827.27
= 120599.82 = 160799.76
Equipment value
(in thousands) $ 118.00* 0.3373 $ 59.00 *0.3373
<u> </u><u>= 39801.4 = 19900.7 </u>
<u>Total Service Costs 350031.22 205081. 46 </u>
<u>Total Costs 1025031.22 717581. 46 </u>
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