Scribd Logo
Upload

Welcome to Scribd!

  • Aljabar Method

    Uploaded by

    NuurLaela
    42 views2 pages
    The algebraic method allocates overhead costs based on the principle of service department facility usage. Under this method, overhead costs are first allocated to service departments. Then any service department that uses facilities of another service department will also allocate part of its overhead costs to that other department. This continues until all allocations are made. As an example, the summary outlines how overhead costs for two production departments and two service departments are allocated using a system of equations based on each department's usage of the service departments' facilities.

    Original Description:

    Aljabar

    Copyright

    © © All Rights Reserved

    Available Formats

    DOC, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The algebraic method allocates overhead costs based on the principle of service department facility usage. Under this method, overhead costs are first allocated to service departments. Then any service department that uses facilities of another service department will also allocate part of its overhead costs to that other department. This continues until all allocations are made. As an example, the summary outlines how overhead costs for two production departments and two service departments are allocated using a system of equations based on each department's usage of the service departments' facilities.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as doc, pdf, or txt
    42 views2 pages

    Aljabar Method

    Uploaded by

    NuurLaela
    The algebraic method allocates overhead costs based on the principle of service department facility usage. Under this method, overhead costs are first allocated to service departments. Then any service department that uses facilities of another service department will also allocate part of its overhead costs to that other department. This continues until all allocations are made. As an example, the summary outlines how overhead costs for two production departments and two service departments are allocated using a system of equations based on each department's usage of the service departments' facilities.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as doc, pdf, or txt
    of 2

    3.

    Algebraic Method

    Allocation of overhead costs according to this method is the allocation based on the
    principle of the use of service department facilities. The service department that uses other
    service department facilities even though the overhead costs have been allocated will be
    allocated from the other assistant departments. This method is used if the services produced
    by the service department are not only enjoyed by one department, but are also used by other
    service departments. For example, the service section consists of the power plant department
    and the repair department. The Department of Electric Power uses a portion of the services
    provided by the repair department to repair diesel engines. On the other hand, the reparations
    department also uses some of the services provided by the power plant to drive repair
    equipment.

    Example

    PT AXA has two production departments and two service departments. The company plans
    Factory Overhead Costs during 2017 (before allocation) as follows

    Departement Amount of Factory Overhead Cost before being allocated


    Production I Rp400.000
    Production II Rp500.000
    Service X Rp100.0000
    Service Y Rp120.0000

    While the usage data of the facility is

    Departement Usage of facilities


    X Y
    I 40% 45%
    II 40% 45%
    X 15% 5%
    Y 5% 5%

    From these data, we are asked to calculate production department overhead costs after the
    allocation of service department overhead costs.

    To answer the case the steps are

    1. Make the equation of the case


    X = Rp100.000 + 5/95 Y
    Y = Rp120.000 + 5/85 X
    Where

    X = Cost of Service Department ‘X" after Allocation

    Y = Service Department Fee ‘Y" after Allocation

    2. From the equation, the allocator is calculated

    X = Rp100.000 + 5/95 (Rp120.000 + 5/85 X)

    X = Rp100.000 + Rp6.315,79 + 0,00309X


    0,99691 X = Rp106.315,79
    X = Rp106.645,32

    Y = Rp1200.000 + 5/85(Rp106.645,32)
    Y = Rp126.273,25
    3. Make a table after allocation

    Information Production Departemnet Service Departement


    I II X Y
    BOP 400.000 500.000 100.000 120.000
    Allocation X 50.186,03 50.186,04 (106.645,32) 6.273,25
    Allocation Y 59.813,97 59.813,96 6.645,32 (126.273,25)
    Total 510.000 610.000 - -

    You might also like