Support Department Cost Allocation

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1 Support Department Cost Allocation
CHAPTER

2 After studying this chapter, you should be able to:
Objectives 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. After studying this chapter, you should be able to:

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

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

5 Langkah-langkah dalam pengalokasian biaya dept pendukung ke dept produksi
1. Membagi perusahaan kedalam departemen-depatemen 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

6 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 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

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

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

10 Hamilton Barry Fixed costs……………… $26,190
AND Barry Hamilton Fixed costs……………… $26,190 Variable costs….. $0.023 per page

11 A Single Charge Rate Hamilton Barry
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 $ $ 6,210 Fixed cost 26,190 Total cost for 270,000 pages $32,400 Barry Hamilton Average cost ($32,400 ÷ 270,000) $0.12 per page

12 Total Photocopying Department Charge
A Single Charge Rate Total Photocopying Department Charge Number of Pages Charge per Page Total Charges x = Audit Department 92,000 $0.12 $11,040 Tax Department 65, ,800 MAS Department 115, ,800 Total 272,000 $32,640

13 Multiple Charging Rates
Amount Allocated to Each Department Peak Number of Pages Proportion of Peak Usage Total Fixed Costs Audit 7, $26,190 $ 5,238 Tax 22, ,190 14,928 MAS 9, , ,024 Total 39,375 $26,190

14 Multiple Charging Rates
Number of Pages x $0.023 Fixed Cost Allocation Total Charges + = Audit department $2,116 $ 5,238 $ 7,354 Tax department 1,495 14,928 16,423 MAS department 2, , ,669 Total $6,256 $26,190 $32,446

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

16 Budgeted Versus Actual Usage
Biaya yang dianggarkan

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

18 Use of Budgeted Data for Product Costing
Number of Copies Total Rate Allocated Charges x = Audit Department 94,500 $0.12 $11,340 Tax Department 67, ,100 MAS Department 108, ,960 Total 270,000 $32,400

19 Use of Actual Data for Performance Evaluation Purposes
Number of Copies Total Rate Allocated Charges x = Audit department 92,000 $0.12 $11,040 Tax department 65, ,800 MAS department 115, ,800 Total 272,000 $32,640

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

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

22 Direct Method of Allocation
Power Maintenance Grinding Assembly

23 Direct Method of Allocation
Power Maintenance Grinding Assembly

24 STEP 1—CALCULATE ALLOCATION RATIOS
Grinding Assembly Power = 600,000 (600, ,000) 0.75 200,000 (600, ,000) 0.25 Maintenance = 4,500 (4, ,500) 0.50 4,500 (4, ,500) 0.50 Direct Method

25 STEP 2—ALLOCATE SUPPORTS DEPARTMENT COSTS USING THE ALLOCATION RATIOS
Support Departments Producing Departments Power Maintenance Grading Assembly Direct costs $250,000 $160,000 $100,000 $ 60,000 Power -250, ,500 62,500 Maintenance , , ,000 $ $ $367,500 $202,500 a b a 0.75 x $250,000 = $187,500; 0.25 x $250,000 = $62,500 0.50 x $160,000 = $80,000 b Direct Method

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

27 Sequential Method of Allocation
STEP 2 Power Maintenance Grinding Assembly

28 Sequential Method of Allocation
STEP 2 Maintenance Grinding Assembly

29 STEP 1—CALCULATE ALLOCATION RATIOS
Maint. Grinding Assembly 200,000 (200, , ,000) 0.20 0.20 Power = 600,000 (200, , ,000) 0.60 Sequential Method

30 STEP 1—CALCULATE ALLOCATION RATIOS
Maint. Grinding Assembly Mainte- nance 4,500 (4, ,500) 0.50 = 4,500 (4, ,500) 0.50 Sequential Method

31 STEP 2—ALLOCATE SUPPORT DEPARTMENT COSTS USING THE ALLOCATION RATIOS
Support Departments Producing Departments Power Maintenance Grading Assembly Direct costs $250,000 $160,000 $100,000 $ 60,000 Power -250,000 50, ,000 50,000 Maintenance , , ,000 $ $ $355,000 $215,000 a b a 0.20 x $250,000 = $50,000; 0.60 x $250,000 = $150,000; 0.20 x $250,000 = $50,000 0.50 x $210,000 = $105,000 b Sequential Method

32 Reciprocal Method Metode alokasi timbal balik mengakui semua interaksi antar departemen pendukung

33 Reciprocal Method Support Departments Producing Departments
Power Maintenance Grading Assembly Direct costs: Normal activity: Kilowatt-hours , , ,000 Maintenance hours 1, ,500 4,500 Proportion of Output Used by Departments Power Maintenance Grading Assembly Allocated ratios: Power Maintenance

34 Reciprocal Method M = Direct costs + Share of Power’s costs
M = $160,000 + $50, M 0.98M = $210,000 M = $214,286

35 Reciprocal Method P = Direct cost + Share of Maintenance’s cost
= $250, ($214,286) P = $250,000 + $21,429 P = $271,429 P

36 ALLOCATE SUPPORT DEPARTMENT COSTS USING THE 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 $ 60,000 Power -271,429 54, ,857 54,286 Maintenance , , , ,429 Total $ $ $359,286 $210,715 from Slide 7-35 from Slide 7-34

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

38 Comparison of Support Department Cost Allocations Using the Direct, Sequential, and Reciprocal Methods Sequential Method Grinding Assembly Direct costs $100,000 $ 60,000 Allocated from power 150,000 50,000 Allocated from maintenance 105, ,000 Total cost $355,000 $215,000 Click on button to compare with direct method Return to show Click on button to compare with reciprocal method

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

40 Departmental Overhead Rates
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

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

42 Chapter Seven The End

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