Question: A housekeeping support department budgets its costs
A housekeeping support department budgets its costs at $20 000 per month plus $18 per hour. The estimated and actual hours for November provided by the housekeeping support department to three operating departments are as follows. 
Required (a) Draw a diagram showing the structure of the costing system. (b) Calculate the housekeeping support department’s allocation rate if estimated hours is the allocation base. (c) Calculate the housekeeping support department’s allocation rate if actual hours is the allocation base. (d) Discuss one advantage and one disadvantage of each type of allocation rate.
Transcribed Image Text:
Department A Department B Department C Total Estimated hours spent cleaning 2400 2100 3000 7 500 Actual hours spent cleaning 2250 2400 2700 7 350
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