BA233 -Accounting for Managers M6 Step 4 LearningActivity OverheadAllocation The activity is onseveral worksheets, see tabs at bottom of worksheet, Part1, Part 2, Part 3, Part4. Make sure to complete all the worksheets. Brooms RUs Brooms R Us operates a largewarehouse store in Roseburg where they sell every kind of broom. Broommanagement is interested in allocating the cost ofsales supervision and utility coststo store departments. Management collected thefollowing information: Department Estimated Monthly Sales In-store square footage assigned Estimated monthly store suppliesusage Estimated monthly sales staff hours Kitchen $ 29,300 2,300 $ 1,900 610 Patio 8,120 400 1,800 35 Industrial 14,970 1,200 2,000 240 Garage 4,380 1,500 1,700 310 Total $ 56,770 5,400 $ 7,400 1,195 SalesSupervision Supervisors work closely withthe sales staff. Management policy is to maintain one supervisor forevery six sales staff. Supervision is considered a fixed cost. Estimated monthly cost ofsales supervision: $ 18,900 UtiltyCost Utilty cost is associated withstore lighting and heating. Utilties are considered afixed cost. Estimated monthly cost ofutilities $ 3,200 Required: Part 1 Determine which cost driver(sales, square footage, supplies usage, or sales staff hours) should be used toallocate sales supervision and utility cost to the departments. Using the aboveinformation select the cost driver that is most related to the overheadcost. Cost Driver Sales supervision BA233 -Accounting for Managers M6 Step 4 LearningActivity Accounting forManagers Week 8 Step 1Activity Overhead Allocation(continued) Brooms RUs Part 2 Okay, let's assume that youselected the following cost drivers in part 1: Sales staff hours for SalesSupervision Square footage for UtilityCost Using the cost informationthat management collected on the Part 1 worksheet calculate the allocation ratefor sales supervision and utiltiy cost. This allocation rate will be used to allocateoverhead cost to departments. Allocation Rate Salessupervision Utilitycost Utility cost BA233 -Accounting for Managers M6 Step 4 LearningActivity Overhead Allocation(continued) Brooms RUs Part 3 Brooms R Us incurred thefollowing actual sales staff hours during June. Use the supervision allocationrate that you calculated in Part 2 to allocate supervision cost to eachdepartment (we will allocate utility cost in Part 4). Calculate amounts to thenearest cent. Department Actual July Sales Staff Hours Allocated Sales Supervision Cost Kitchen 635 Patio 43 Industrial 217 Garage 268 Total 1,163 BA233 -Accounting for Managers M6 Step 4 LearningActivity Overhead Allocation(continued) Brooms RUs Part 4 Brooms R Us used the followingsquare footage for each department during June. Use the utility allocationrate that you calculated in Part 2 to allocate utility cost to eachdepartment. Calculate amounts to the nearest cent. Department Square Footage Used in July Allocated Utility Cost Kitchen 2,300 Patio 400 Industrial 1,200 Garage 1,500 Total 5,400

Question

BA233 -Accounting for Managers     M6 Step 4 LearningActivity      OverheadAllocation             The activity is onseveral worksheets, see tabs at bottom of worksheet, Part1,   Part 2, Part 3, Part4. Make sure to complete all the worksheets.            Brooms RUs      Brooms R Us operates a largewarehouse store in Roseburg where they sell every kind of broom. Broommanagement is interested in allocating the cost ofsales   supervision and utility coststo store departments.             Management collected thefollowing information:     Department Estimated Monthly Sales In-store square footage assigned Estimated monthly store suppliesusage Estimated monthly sales staff hours   Kitchen $ 29,300  2,300 $ 1,900  610   Patio  8,120  400  1,800  35   Industrial  14,970  1,200  2,000  240   Garage  4,380  1,500  1,700  310   Total  $ 56,770  5,400 $ 7,400  1,195                   SalesSupervision      Supervisors work closely withthe sales staff. Management policy is to   maintain one supervisor forevery six sales staff. Supervision is considered  a fixed cost.       Estimated monthly cost ofsales supervision:  $ 18,900                   UtiltyCost       Utilty cost is associated withstore lighting and heating.    Utilties are considered afixed cost.     Estimated monthly cost ofutilities   $ 3,200           Required:       Part 1      Determine which cost driver(sales, square footage, supplies usage, or sales staff hours) should be used toallocate sales supervision and utility cost to the  departments. Using the aboveinformation select the cost driver that is    most related to the overheadcost.                  Cost Driver   Sales supervision     BA233 -Accounting for Managers     M6 Step 4 LearningActivity     Accounting forManagers     Week 8 Step 1Activity     Overhead Allocation(continued)            Brooms RUs      Part 2      Okay, let's assume that youselected the following cost drivers in part 1:   Sales staff hours for SalesSupervision     Square footage for UtilityCost    Using the cost informationthat management collected on the Part 1 worksheet calculate the allocation ratefor sales supervision and utiltiy cost. This allocation  rate will be used to allocateoverhead cost to departments.              Allocation Rate   Salessupervision     Utilitycost       Utility cost      BA233 -Accounting for Managers    M6 Step 4 LearningActivity    Overhead Allocation(continued)          Brooms RUs     Part 3     Brooms R Us incurred thefollowing actual sales staff hours during June.       Use the supervision allocationrate that you calculated in Part 2 to allocate  supervision cost to eachdepartment (we will allocate utility cost in Part 4).  Calculate amounts to thenearest cent.          Department Actual July Sales Staff Hours Allocated Sales Supervision Cost   Kitchen   635    Patio   43    Industrial   217    Garage   268    Total   1,163  BA233 -Accounting for Managers    M6 Step 4 LearningActivity    Overhead Allocation(continued)          Brooms RUs     Part 4     Brooms R Us used the followingsquare footage for each department during June.       Use the utility allocationrate that you calculated in Part 2 to allocate  utility cost to eachdepartment. Calculate amounts to the nearest cent.        Department Square Footage Used in July Allocated Utility Cost   Kitchen   2,300    Patio   400    Industrial   1,200    Garage   1,500    Total   5,400

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