SubmitA manufacturing company 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 Maintenanceon the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year justcompleted follow:Custodial ServicesMaintenanceCuttingMillingAssemblyBudgeted costs before allocatlon$20,000$12,000$ 120,000$75,000$135,000Square feet2,00020,00010,00044,00026,000Labor hours4,0008,0008,000a. Calculate the Custodial Services cost that would be allocated to Assembly Department by the direct method.O None of the answers listedO $8,000O $11,000O $5,200O $6,500b. Calculate the total cost of Assembly Department if the company uses the step-down method rather than the direct method. Assumethat the company allocates Custodial Services cost first.O $146,200O $145,000O $146,600O $148,200Nono Aftkn a nciuAre lictad

Step-Down Method: The step-down allocation technique in cost accounting allows support departments…

Answered: A manufacturing company has two service…

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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A company sells two types of products: standard and deluxe. It prepares the following analysis showing budgeted cost and cost driver activity for each of its three activities.
Activity-Based Costing: Factory Overhead Costs The total factory overhead for Bardot Marine Company is budgeted for the year at $1,556,000, divided into four activities: fabrication, $760,000; assembly, $296,000; setup, $270,000; and inspection, $230,000. Bardot Marine manufactures two types of boats: speedboats and bass boats. The activity-base usage quantities for each product by each activity are as follows: Fabrication Assembly Setup Inspection Speedboat 10,000 dlh 27,750 dlh 72 setups 125 inspections Bass boat 30,000 9,250 528 875 40,000 dlh 37,000 dlh 600 setups 1000 inspections Each product is budgeted for 3,000 units of production for the year. a. Determine the activity rates for each activity. Fabrication $fill in the blank 1 per direct labor hour Assembly $fill in the blank 2 per direct labor hour Setup $fill in the blank 3 per setup Inspection $fill in the blank 4 per inspection b. Determine the activity-based factory overhead per unit…
compute the budgeted factory overhead rate (i.e., the $ rate per activity base hour, etc.) for department y
Indirect Cost Allocation: Direct MethodSprint Manufacturing Company has two production departments, Melting and Molding. Direct general plant management and plant security costs benefit both production departments. Sprint allocates general plant management costs on the basis of the number of production employees and plant security costs on the basis of space occupied by the production departments. In November, the following overhead costs were recorded: Melting Department direct overhead $180,000 Molding Department direct overhead 400,000 General plant management 100,000 Plant security 35,000 Other pertinent data follow: Melting Molding Number of employees 30 55 Space occupied (square feet) 10,000 30,000 Machine hours 10,000 2,000 Direct labor hours 4,000 20,000 (a) Prepare a schedule allocating general plant management costs and plant security costs to the Melting and Molding Departments.Instructions: Do not round computations until you final…
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Tasman Products has a Maintenance Department that services equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments based on machine-hours. Data for the Maintenance Department follow: Variable costs for lubricants Fixed costs for salaries and other Budget $ 261,000* Actual $ 215,000 $ 333,300 $ 231,500 *Budgeted at $18 per machine-hour. Data for the Forming and Assembly Departments follow: Percentage of Peak- Forming Department Assembly Department Total Machine-Hours Period Capacity Required Budget Actual 74% 9,700 11,700 26% 100% 4,800 3,800 14,500 15,500 The amount of fixed costs in the Maintenance Department is determined by peak-period requirements. Required: 1. How much Maintenance Department cost should be charged to the Forming Department and to the Assembly Department? 2. How much, if any, of the Maintenance Department's actual costs should be treated as a spending variance and not charged to the…
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The managers of Cheyenne Manufacturing are discussing ways to allocate the cost of service departments, such as quality control and maintenance, to the production departments. To aid them in this discussion, the controller has provided the following information: Quality Control Maintenance Machining Assembly Total Budgeted overhead $374,000 $200,000 $392,000 $272,000 $1,238,000 costs before Allocation Budgeted machine – – 45,000 – 45,000 Hours Budgeted direct – – – 23,000 23,000 labour hours Budgeted hours – 5,000 15,000 5,000 25,000 of service: Quality Control Maintenance 8,000 – 14,400 9,600 32,000
compute the budgeted factory overhead rate (i.e., the $ rate per activity base hour, etc.) for department x
ABC Company is exploring ways to allocate the cost of service departments such as Quality Control and Maintenance to the production department such as Machining and Assembly. The controller of the company has provided the following information: Quality Maintenance Machining Assembly Total Control Budgeted overhead costs P350,000 P200,000 P400,000 P300,000 P1,250,000 before allocation Budgeted 50,000 hours 50,000 hours machine hours Budgeted direct labor 25,000 hours 25.000 hourS hours Budgeted hours of 7,000 hours 21.000 hours 7,000 hours 35,000 hours service of quality control Budgeted jo Sinoų 10,000 hours 18.000 hours 12,000 hours 40,000 hours service of Under the step down method of allocating service department costs from quality control to maintenance, what is the total service cost allocated to the assembly department?
Craftmore Machining reports the following budgeted overhead cost and related data for this year. Activity Budgeted Cost Activity Cost Driver Budgeted Activity Usage Assembly $ 399,750 Direct labor hours (DLH) 13,000 Product design 61,500 Engineering hours (EH) 1,230 Electricity 20,500 Machine hours (MH) 10,000 Setup 51,250 Setups 410 Total $ 533,000 Required:1. Compute a single plantwide overhead rate assuming the company allocates overhead cost based on 13,000 direct labor hours.2. Job 31 used 240 direct labor hours and Job 42 used 520 direct labor hours. Allocate overhead cost to each job using the single plantwide overhead rate from part 1.3. Compute an activity rate for each activity using activity-based costing.4. Allocate overhead costs to Job 31 and Job 42 using activity-based costing. Activity Cost Driver Activity Usage Job 31 Job 42 Direct labor hours (DLH) 240 520 Engineering hours (EH) 27 33 Machine hours (MH) 60 60 Setups 5 7

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