Veenus Toys makes metal and plastic toys in separate departments. It has two support departments

Overview

Veenus Toys makes metal and plastic toys in separate departments. It has two support departments, Accounting and Information Systems. Veenus has decided to allocate Accounting department costs based on the number of employees in each department and Information Systems costs based on the number of computers in each department. Given the information below, use the Step Down Method to allocate support department costs.1)

	Support Dep'ts	Operating Departments	Total
Acc-ounting	Info Systems	Plastic Products	Metal Products
Total department costs	$32,000	$48,000	$300,000	$200,000	$580,000
Number of employees	3	6	9	12	30
Number of computers	6	8	10	16	40

1)A process that yield one or more products is called a joint process and the products so produced are called joint products. The cost of such process is called joint cost. This joint must be allocated among the joints products to determine the final cost of each product. There are four methods of allocating this cost.You are required to illustrate only one of these methods with suitable numerical example.

Prepare Flexible budget with three levels of sales volumes. Sales in units at three levels, selling price per unit, variable cost per unit and the fixed cost are to be assumed by yourself.