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Write 1 page with APA style on Allocation of Costs. May 25, Allocation of_Costs A: Activity_based costing Table shows (appendix section) the allocation of the maintenance_department labor_cost using t
Write 1 page with APA style on Allocation of Costs. May 25, Allocation of_Costs A: Activity_based costing Table shows (appendix section) the allocation of the maintenance_department labor_cost using the activity_based cost (Epstein, 2011). By multiplying the labor_hours by the labor_cost per_hour, the total labor_cost is generated. For the maintenance aspect, the total labor_cost is $120,000. For the repair activities, the total labor_cost is $72,000. The total labor_cost of the entire company is $192,000.00.
Allocation of Maintenance Supplies Cost
Table 2 (appendix section) shows the financial allocation of the maintenance_department’s supply cost_allocation. The allocation is grounded on the actual supplies that were used each department. For the pharmacy, the allocation is arrived at using the formula: (200/80,000) x $100,000. The other departments’ share of the $100,000 maintenance supply_costs is: $ 79,800/80,000) x $ 100,000 (Finkler et al., 2013).
Allocation of Maintenance Administration Cost
Table 3 (Appendix section) shows the allocation of the maintenance_department administration_costs (Finkler et al., 2013). The costs are allocated using the volume of repairs output of Pharmacy department_and resources. The pharmacy department formula is: (3/800)x$15,000. The formula for the other departments’ share of the maintenance_department’s administration_costs was generated using the formula: (797/800)x15,000=$14,977.00 (Epstein, 2011).
Summary of maintenance_department’s costs allocation
The table 4 shows the breakdown of the maintenance departments’ allocation to the Pharmacy and other departments (Epstein, 2011).
B: Absorption_Costing
Table 5 (appendix section) shows the allocation of the maintenance_department costs (Finkler et al., 2013). The costs are allocated based on the square_feet factor. For example, the maintenance_department’s labor_cost allocated to the pharmacy department was computed using: (2,000/100,000)*192,000.00= $3,840.00.
References:
Epstein, M. (2011). Advances in Management Accounting. New York: Emerald Press.
Finkler et al., (2013). Financial Management for Public, Health, and Not-For-Profit Organizations . Upper Saddle River: Pearson Press.
Appendix
Table 1
Allocation of Maintenance Labor Cost
Computation
Maintenance
Repairs
Total
Labor hours
10,000
4,000
14,000
Labor Cost/Hr
12.00
18.00
13.71
Total Labor Cost
120,000
17,000
192,000
Table 2:
Allocation of Maintenance Supplies Cost
Description
Pharmacy
Other Departments
Total
Actual Department supplies
200
79,800
80,000.00
Allocation (maintenance supply cost)
(200/80,000)x 100,000
(79/800/80,000)x 100,000
100,000.00
Table 3
Allocation of Maintenance Administration Cost
Description
Pharmacy
Other Departments
Total
Volume Repairs
3
797
800
Allocation of Maintenance Administration Cost
(3/800)x 15,000
(797/800) x15,000
15,000.00
Table 4
Summary of maintenance costs’ allocation
Costs
Pharmacy
Other Departments
Total Maintenance Department Costs
Labor
288.00
191,712.00
192,000.00
Supplies
250.00
99,750.00
100,000.00
Administration
22.50
14,977.50
15,000.00
Total
560.6
306,439.50
307,000.00
Table 5
Absorption_Costing
Costs
Pharmacy
Other Departments
Total Maintenance Department Costs
Square feet
2,000.00
98,000.00
100,000.00
Labor Costs
3,840.00
188,160.00
192,00.00
Supplies
2,000.00
98,000.00
100,000.00
Administration
300.00
14,700.00
15,000.00
Total
6,140.00
300,860.00
307,000.
