A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the ser- vice departments. The production departments are Assembly and Machining. The followwing data have been estimated for next year's operations: Direct labor hours: Floor space occupied: Assembly, B0,000; Machining, 40,000 Factory Office, 10%Assembly, 40% Machining. 50% The direct charges identified with each of the departments are as follows: Building maintenance.... $ 90,000 Factory office.. 171,000 Assembly .... 378,000 Machining 328,000 The building maintenance department services all departments of the company, and its costs are allocated using floor space occu- pied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 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. 1.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question
A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the ser- vice departments. The production departments are Assembly and Machining. The followwing data have been estimated for next year's operations: Direct labor hours: Floor space occupied: Assembly, B0,000; Machining, 40,000 Factory Office, 10%Assembly, 40% Machining. 50% The direct charges identified with each of the departments are as follows: Building maintenance.... $ 90,000 Factory office.. 171,000 Assembly .... 378,000 Machining 328,000 The building maintenance department services all departments of the company, and its costs are allocated using floor space occu- pied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 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. 1.
Direct method and sequential method of distributing service
department costs
A manufacturing company has two service and two production
departments. Building Maintenance and Factory Office are the ser-
vice departments. The production departments are Assembly and
Machining.
The followwing data have been estimated for next year's operations:
Direct labor hours:
Floor space occupied:
Assembly, B0,000; Machining, 40,000
Factory Office, 10%Assembly. 40%
Machining. 50%
The direct charges identified with each of the departments are
as follows:
Building maintenance....
$ 90,000
Factory office..
171,000
Assembly
.....
378,000
Machining
328,000
The building maintenance department services all departments of
the company, and its costs are allocated using floor space occu-
pied, while factory office costs are allocable to Assembly and
Machining on the basis of direct labor hours.
Distribute the service department costs, using the direct
method.
Distribute the service department costs, using the sequential
1.
2.
distribution method, with the department servicing the greatest
number of other departments distributed first.
Transcribed Image Text:Direct method and sequential method of distributing service department costs A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the ser- vice departments. The production departments are Assembly and Machining. The followwing data have been estimated for next year's operations: Direct labor hours: Floor space occupied: Assembly, B0,000; Machining, 40,000 Factory Office, 10%Assembly. 40% Machining. 50% The direct charges identified with each of the departments are as follows: Building maintenance.... $ 90,000 Factory office.. 171,000 Assembly ..... 378,000 Machining 328,000 The building maintenance department services all departments of the company, and its costs are allocated using floor space occu- pied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. Distribute the service department costs, using the direct method. Distribute the service department costs, using the sequential 1. 2. distribution method, with the department servicing the greatest number of other departments distributed first.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education