Allocation of Costs - Coursework Example

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 allocationThe 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.AppendixTable 1Allocation of Maintenance Labor CostComputationMaintenanceRepairsTotalLabor hours10,0004,00014,000Labor Cost/Hr12.0018.0013.

71Total Labor Cost120,00017,000192,000Table 2:Allocation of Maintenance Supplies CostDescriptionPharmacyOther DepartmentsTotalActual Department supplies20079,80080,000.00Allocation (maintenance supply cost)(200/80,000)x 100,000(79/800/80,000)x 100,000100,000.00Table 3Allocation of Maintenance Administration CostDescriptionPharmacyOther DepartmentsTotalVolume Repairs3797800Allocation of Maintenance Administration Cost(3/800)x 15,000(797/800) x15,00015,000.00Table 4Summary of maintenance costs’ allocationCostsPharmacyOther DepartmentsTotal Maintenance Department CostsLabor288.00191,712.00192,000.

00Supplies250.0099,750.00100,000.00Administration22.5014,977.5015,000.00Total560.6306,439.50307,000.00Table 5Absorption_CostingCostsPharmacyOther DepartmentsTotal Maintenance Department CostsSquare feet2,000.0098,000.00100,000.00Labor Costs3,840.00188,160.00192,00.00Supplies2,000.0098,000.00100,000.00Administration300.0014,700.0015,000.00Total 6,140.00300,860.00307,000.00