Allen Company has three departments - Lawn, Bush, and Plowing. Allen Company uses ABC for the allocation of its three office costs gas, invoices) among the three departments. The following information is provided about the office costs: Activities Labor Gas Total Costs $320,000 $36,000 Invoices $40,000 Total costs $396,000 Activity-cost drivers 8,000 hours 6,000 gallons 2,500 invoices The above activities used by their three departments are:

Allen Company has three departments - Lawn, Bush, and Plowing. Allen Company uses ABC for the allocation of its three office costs gas, invoices) among the three departments. The following information is provided about the office costs: Activities Labor Gas Total Costs $320,000 $36,000 Invoices $40,000 Total costs $396,000 Activity-cost drivers 8,000 hours 6,000 gallons 2,500 invoices The above activities used by their three departments are:

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 1CMA

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A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
Allen Company has three departments - Lawn, Bush, and Plowing. Allen Company uses ABC for the allocation of its three office costs (labor, gas, invoices) among the three departments. The following information is provided about the office costs: Activities Labor Gas Total Costs $320,000 $36,000 Invoices $40,000 Total costs $396,000 Labor Gas Invoices Activity-cost drivers The above activities used by their three departments are: Lawn Department 2,500 hours 1,700 gallons 1,600 invoices 8,000 hours 6,000 gallons 2,500 invoices Bush Department 1,200 hours 800 gallons 400 invoices Plowing Department 4,300 hours 3,500gallons 500 invoices How much of the total cost will be assigned to the Plowing Department? Example of Answer: 4000 (No comma, space, decimal point, or $ sign) Answer: 21000
Renata Company has four departments: Materials, Personnel, Manufacturing, and Packaging. Information follows. Department Materials Personnel Manufacturing Packaging Employees Square Feet Asset Values $ 7,900 4,740 45,820 20,540 $ 79,000 38 19 76 57 64,750 9,250 92,500 18,500 Total 190 185,000 The four departments share the following indirect expenses for supervision, utilities, and insurance according to their allocation bases. Indirect Expense Supervision Utilities Cost Allocation Base $ 84,400 Number of employees 69,000 Square feet occupied 32,000 Asset values $ 185,400 Insurance Total Allocate each of the three indirect expenses to the four departments. Supervision Cost to be Allocated Allocation Base Percent of Allocation Base Allocated Cost expenses Department Numerator Denominator % of Total Materials Personnel Manufacturing Packaging Totals Cost to be Allocated Utilities Allocation Base Percent of Allocation Base Allocated Cost Department Numerator Denominator % of Total…
Renata Company has four departments: Materials, Personnel, Manufacturing, and Packaging. Information follows. Department Square Feet Asset Values Employees Materials 40 60,000 $ 9,750 Personnel 8 7,500 1,300 Manufacturing Packaging 64 67,500 33,800 48 15,000 20,150 Total 160 150,000 $ 65,000 The four departments share the following indirect expenses for supervision, utilities, and insurance according to their allocation bases. Indirect Expense Supervision Utilities Insurance Total Cost $ 83,000 Number of employees Allocation Base 55,000 Square feet occupied 25,000 Asset values $ 163,000 Allocate each of the three indirect expenses to the four departments.
Allen Company has three departmentd - lawn, bush, and plowing. Allen Company uses ABC for the allocation of its three office costs (labor, gas, invoices) among the three departments. The following information is provided about the office costs. Activities , total costs, Activity-cost divers Labor , $320,000, 8,000 hours Gas, $36,000, 6,000 gallons Invoices, $40,000, 2,500 invoices Total costs $396,000 The above activities used by the their three departments are: Lawn Department labor 2,500 hours, gas 1,700 gallons, invoices 1,600. Bush department labor 1,200 hours, gas 800 gallons, invoices 400. Plowing department labor 4,300 hours, gas 3,500 gallons, invoices 500. How much of the labor cost will be assigned to the Bush Department?
Snowflake Company has two service departments (S1 and S2) and two producing departments (P1 and P2). Department S1 costs are allocated on the basis of number of employees, and Department S2 costs are allocated on the basis of space occupied expressed in square feet. Data on direct department costs, number of employees, and space occupied are as follows: Direct dept. costs Number of employees Space occupied P1 P2 0 S1 S2 P1 $15,000 $22,000 $55,000 0 10 2,000 If Snowflake uses the direct method, what is the ratio representing the portion of Department S2 allocated to P2? 25 5 1,000 3,000 P2 $60,000 30 7,000
Riemer, Incorporated has four departments. Information about these departments is listed below. Maintenance is a service department. If allocated maintenance cost is based on floor space occupied by each of the other departments, compute the amount of maintenance cost allocated to the Cutting Department. (Do not round your intermediate computations.) Department Direct Expenses Square Feet Employees Maintenance $ 18,000 900 10 Cutting 21,000 1,400 10 Assembly 61,000 2,400 10 Packaging 2,400 3,400 10
Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Costs Personnel Legal Complete this question by entering your answers in the tabs below. Total Personnel $ Personnel $ 10,800 $ 320,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method. 320,000 $ 320,000 $ Required A Required B Required C Allocate the cost of the service departments to the operating divisions using the reciprocal method. Note: Do not round intermediate calculations. Round your final answers…
Renats Company has four departments: Materials, Personnel, Manufacturing, and Packaging. Information follows. Employees Square Feet Asset values $ 18,358 4,148 Department Materials Personal Manufacturing Packaging Total Supervision expences Department Materials Personnel Manufacturing Packaging Totals Utilitiec The four departments share the following Indirect expenses for supervision, utilities, and insurance according to their allocation bases. Indirect Expense Cost Allocation Base Supervision utilities $82,880 Number of employees 59,888 Square feet occupied 27,880 Asset values $ 168,000 Insurance Total Department Materials Personnel Manufacturing Packaging Allocate each of the three Indirect expenses to the four departments. Totals 58 Incurance Department Materials Personnel Manufacturing Packaging 8 70 64 Totals 66,500 9,500 95,000 19,808 198,800 Allocation Base 38,648 15,878 $ 69,000 Allocation Bate Allocation Base Percent of Allocation Baca Numerator Denominator of Total Percent…
Braun Company has one service department and two operating (production) departments. Maintenance Department costs are allocated to the two operating departments based on square feet occupied. Listed below are the operating data for the current period: Department Direct Expenses Square FeetMaintenance $ 25,500 Milling 76,500 10,000 Assembly 105,400 15,000 The total cost of operating the Assembly Department for the current period is?
Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows: IS Personnel Administration Residential Commercial Number of IS service tickets 125 155 110 1,410 940 Number of employees 70 75 62 138 162 Square footage occupied 3,900 8,000 3,800 16,100 69,500 The costs of the service departments and the allocation basis for each department follow. Department Direct Cost Allocation Base Information Systems (IS) $ 24,000 IS service tickets Personnel 31,000 Employees Administration 27,700 Square footage occupied Required: Assume that the company allocates service department costs to production departments using the direct method. What amount of Information Systems (IS) Department costs will be allocated to the Commercial…
Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows: IS Personnel Administration Residential Commercial Number of IS service tickets 130 160 115 1,410 940 Number of employees 75 80 67 138 162 Square footage occupied 3,900 8,000 3,800 16,100 69,500 The costs of the service departments and the allocation basis for each department follow. Department Direct Cost Allocation Base Information Systems (IS) $ 25,000 IS service tickets Personnel 32,000 Employees Administration 28,700 Square footage occupied d. Assuming that the company allocates service department costs to other departments using the step method (starting with Administration and then IS), What amount of IS Department costs is allocated to Administration?