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Question - DD Company has two departments, Dept. A and Dept. You are provided the following costs for five activities that occur at the manufacturing plant every month:
Activity
Total Costs (SAR)
Total number of units of Cost Driver
Material handling
315,000
450,000 parts
Supervision of direct labor
180,000
110 employees
Janitorial and cleaning
250,000
5,500 hours
Machining
350,000
8,500 machine hours
Total costs
1,095,000
The above activities are used by the two departments as follows:
Department A
Department B
220,000 parts
230,000 parts
65 employees
45 employees
Time spent cleaning
2,500 hours
3,000 hours
Number of machine hours
6,000 machine hours
2,500 machine hours
Required -
a. How much of the material handling cost will be allocated to Department A?
b. What is the ABC allocation rate for supervision of direct labor?
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