For companies that sell goods or services on account, if revenue is recognized prematurely, what would be overstated: sales or a
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Answer:
due to the limitation of brainly text document kindly check the attached images below to see the proper and organized accounting table containing the answer to the question
Explanation:
Allocation of service costs - Accounting
Particulars Calculation Maintenance Dept A Dept B Total
Number of
employees Given 2 8 4 14
Cost to be allocated $120,000 x 2/14 $17,142.86
$120,000 x 8/14 $68,571.43
$120,000 x 4/14 $ 34,285.71$
1,20,000.00
Allocation of service costs - Maintenance
Particulars Calculation Dept A Dept B Total
Machine hours Given 2300 200 2500
Cost to be allocated $317,142x 2300/2500 $ 2,91,771.43
$317,142x 200/2500 $ 25,371.43 $ 3,17,142.86
Particulars Maintenance Accounting Department A Department B
Department cost before allocation $ 3,00,000.00 $ 1,20,000.00 $ 3,00,000.00 $ 5,00,000.00
Allocation:
Accounting Department $ 17,142.86 $ -1,20,000.00 $ 68,571.43 $ 34,285.71
Balance $ 3,17,142.86 $ - $ 3,68,571.43 $ 5,34,285.71
Maintenance Department $ -3,17,142.86 $ 2,91,771.43 $ 25,371.43
Total Costs after allocation $ - $ 6,60,342.86 $ 5,59,657.14
B. The joint cost to be allocated to product X will be in the proportion of Net realizable value at the point of split off. Further total joint costs should be reduced by the revenue from by product Z.
