b Compute the price charged for the 5000 control units it Wa

b) Compute the price charged for the 5,000 control units it Watanabe uses t s-BI tem proposed by Ms. Yamamoto. 4. Explai n why costs are different in the two costing systems. Include an indication f ut costs you think are most accurate, and explain why 5-AJ DIRECT METHOD FOR SERVICE DEPARTMENT ALLOCATION Wbeial Controls Company has two producing departments, Mechanical Instruments and Electronic Instruments. In addition, there are two service departments, Building Senie and Materials Receiving and Handling. The company purchases a variety of componam parts from which the deparments assemble instruments for sale in domestic and inter tional markets The Electronic Instruments division is highly automated. The manufacturing cons depend primarily on the number of subcomponents in each instrument. In contrast, de Mechanical Instruments division relies primarily on a large labour force to hand-assemie instruments. Its costs depend on direct-labour-hours. The costs of Building Services depend primarily on the square metres occupied. The costs of Materials Receiving and Handling depend primarily on the total number of cop- nents handled. Instruments MI and M2 are produced in the Mechanical Instruments department, nd El and E2 are produced in the Electronic Instruments department. Data for these proists follow: Direct Materials Cost 74 Number of ComponentsDirect-Labour-Hean 5-B2 A 4.0 8.0 21 63 91 Budget figures for 2012 include:

Solution

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	Service Departments	Productive Departments
Building Service	Material receiving and handling	Mechanical Instruments	Electronic Instruments
Department Costs	150000	120000	680000	348000
Building Service allocation	-150000		100000	50000
Meterial receiving and handling allocation		-120000	16552	103448
Total cost after allocation	0	0	796552	501448
Key Statistics:
Square metres occupied			50000	25000
Number of components handled			80000	500000
			(8,000 x 10)	(10,000 x 50)