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Chapter 2 Assignment

The document describes sales revenue and indirect costs for two divisions of a company. The food division had sales revenue of $337,218 and indirect costs allocated to it were $32,488. The bar-lounge division had sales revenue of $206,682 and indirect costs allocated to it were $19,912. Total indirect costs to allocate were $52,400.

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53 views

Chapter 2 Assignment

The document describes sales revenue and indirect costs for two divisions of a company. The food division had sales revenue of $337,218 and indirect costs allocated to it were $32,488. The bar-lounge division had sales revenue of $206,682 and indirect costs allocated to it were $19,912. Total indirect costs to allocate were $52,400.

Uploaded by

Nash nasywa
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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E2.

13 Assume that a food division reported sales revenue of $337,218 and the bar-lounge reported
sales revenue of $206,682. Indirect costs of $52,400 are to be allocated to each division on the basis
of sales revenue.

a. What is the allocated amount of indirect costs to be food division?

Sales revenue (food division) = $337,218


Sales revenue (Bar-lounge) = $206,682

$337,218 + 206,682 = 543,900

337,218 x 52,400 = 32,488


543,900

b. What is the allocated amount of indirect costs to the beverage division?

$206,682 x 52,400 = 19,912


$543,900
P7.9 You have the following information from the records of a restaurant:

Sales Revenue Wage Costs

January $ 11,200 $ 5,300


February 13,000 6,100
March 14,900 6,200
April 19,100 7,000
May 22,000 9,000
June 24,200 9,600
July 26,300 9,700
August 27,400 10,100
September 23,500 8,300
October 20,100 7,600
November 18,200 8,000
December 16,000 7,100
Totals $235,900 $94,000

Use the high-low method to calculate total fixed cost and total variable cost of the year.

High-low method

Variable cost per unit = Highest activity cost – Lowest Activity Cost
Highest Activity Units – Lowest Activity Unit.

Activity Units/Sales:
Highest (August : RM 27,400)
Lowest (January : RM11,200)

Activity Cost:
Highest (August : RM 10,100)
Lowest (January : RM 5,300)

Cost
Sales

Variable cost = 10,100 – 5,300


27,400 – 11,200

= 4,800
16,200
= RM 0.30 per sales

Total Fixed Cost = Highest Activity Cost – (Variable Cost per sales x Highest Activity Unit)
= 10,100 – (0.30 x 27,400)
= 10,100 – 8,220
= RM 1,880 per month

For a year = RM 1,880 x 12 months


= RM 22,560

Total Variable Cost = Cost per units x Total Number of units/sales


= 0.30 x 235,900
= RM 70,770

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