5.) Alpha Manufacturing Corporation has two service departments, Custodial Services and Maintenance, and three production departments, Cutting, Milling, and Assembly. The company allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow: Budgeted costs before allocation Square feet Labor-hours Service Departments Operating Departments Custodial Maintenance Cutting Milling Assembly $40,000 4,000 $28,000 40,000 $160,000 $88,000 $185,000 50,000 32,000 7,000 7,000 30,000 3,000 Required: a. Prepare a schedule to allocate service department costs to the production departments by the direct method. b. Prepare a schedule to allocate service department costs to the production departments by the step-down method, allocating Custodial Services first.

5.) Alpha Manufacturing Corporation has two service departments, Custodial Services and Maintenance, and three production departments, Cutting, Milling, and Assembly. The company allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow: Budgeted costs before allocation Square feet Labor-hours Service Departments Operating Departments Custodial Maintenance Cutting Milling Assembly $40,000 4,000 $28,000 40,000 $160,000 $88,000 $185,000 50,000 32,000 7,000 7,000 30,000 3,000 Required: a. Prepare a schedule to allocate service department costs to the production departments by the direct method. b. Prepare a schedule to allocate service department costs to the production departments by the step-down method, allocating Custodial Services first.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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