ABC Company is exploring ways to allocate the cost of service departments such as QualityControl and Maintenance to the production department such as Machining and Assembly. Thecontroller of the company has provided the following information:QualityMaintenance MachiningAssemblyTotalControlBudgetedoverhead costsP350,000P200,000P400,000P300,000P1,250,000beforeallocationBudgeted50,000 hours50,000 hoursmachine hoursBudgeteddirect labor25,000 hours25,000 hourshoursBudgetedhours of7,000 hours21,000 hours 7,000 hours35,000 hoursservice ofquality controlBudgetedhours of10,000 hours18,000 hours 12,000 hours 40,000 hoursservice ofmaintenanceUnder the step-down method of allocating service department costs from quality control tomaintenance, what is the total service cost allocated to the machining department?

Step Down Method: Under step down method it is assumed that one Service department is providing…

Answered: ABC Company is exploring ways to…

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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Arctica manufactures snowmobiles and ATVs. These products are made in different departments, and each department has its own manager. Each responsibility performance report includes only those costs that the department manager can control: direct materials, direct labor, supplies used, and utilities. Budget Actual For Year Ended December 31 Direct materials Direct labor Department manager salaries Snowmobile $ 19,610 10,500 ATV $ 27,600 Snowmobile $ 19,520 ATV $ 28,930 4,400 20,600 5,300 10,770 21,350 4,500 Supplies used Utilities Rent 3,410 370 5,800 910 550 6,400 3,270 340 5,400 4,500 940 510 6,400 Totals $ 44,090 $ 61,360 $ 43,800 $ 62,630 Exercise 24-1 (Algo) Responsibility accounting performance report LO P1 Prepare a responsibility accounting performance report for the snowmobile department. Note: Under budget amounts should be indicated by a minus sign. Responsibility Accounting Performance Report Controllable Costs Manager, Snowmobile Department For Year Ended December 31…
Dawson Company manufactures small table lamps and desk lamps. The following shows the activities per product and the total overhead information: Units Setups Inspections Assembly (dlh) 3,400 3,600 8,800 7,200 Small table lamps Desk lamps 8,400 14,000 43,200 43,200 Total Activity-Base Usage Budgeted Activity Cost 10,800 $109,080 22,400 114,240 75,600 340,200 Activity Setups Inspections Assembly (dlh) The total factory overhead (rounded to the nearest cent) to be allocated to each unit of small table lamps is O a. $80.47 O b. $136.80 O c. $48.28 O d. $104.61
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Shilongo Ltd uses Job costing to attribute costs to individual products and services provide to its customers. It has begun the preparation of its fixed production cost budget for the forthcoming period. The company has three production departments Machining, Assembly and Finishing and two service department stores and maintenance. The following costs have been produced: Machining Assembly Finishing Stores Maintenance Overhead costs 6000 2500 1500 1000 800 The number of machine and labour hours budgeted for the forthcoming period is budgeted as follows: Machining Assembly Finishing Machine hours 500 40 50 Labour hours 100 300 200 Overheads are absorbed in Assembly and Finishing departments on a labour hour basis and in Machining department they are absorbed on a machine hour basis. It has been estimated that service departments usage is as follows: Machining Assembly Finishing Stores Maintenance Maintenance 55% 20% 20% 5% - Stores 40% 30% 20% - 10%…
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Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Activity Cost Activity Base Procurement $364,200 Number of purchase orders Scheduling 243,400 Number of production orders Materials handling 417,300 Number of moves Product development 773,900 Number of engineering changes Production 1,428,300 Machine hours Number of Number of Number Number of Number Purchase Production of Engineering Machine of Orders Orders Moves Changes Hours Units Disk drives 4,120 270 1,500 11 2,200 2,100 Tape drives 2,400 245 500 7 8,500 3,500 Wire drives 11,500 790 3,500 21 10,700 2,400 The activity-based cost for each tape drive unit is Oa. $291.69 Ob. $239.52 Oc. $740.06 Od. $20.21
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Prism Company has two service departments: security departments and maintenance departments that give services to two producing departments: machining department and assembling department. Security department costs will be allocated using the number of employees and maintenance department costs will be allocated using direct labor hours. For calculation of predetermined rate, machine hours and direct labor hours are used for machining and assembling departments, respectively.
Panamint Systems Corporation is estimating activity costs associated with producing disk drives, tapes drives, and wire drives. The indirect labor can be traced to four separate activity pools. The budgeted activity cost and activity base data by product are provided below. Activity Cost Activity Base Procurement $302,300 Number of purchase orders Scheduling $220,600 Number of production orders Materials handling $416,500 Number of moves Product development $755,400 Number of engineering changes Production $1,551,600 Machine hours Number ofPurchaseOrders Number ofProductionOrders NumberofMoves Number ofEngineeringChanges MachineHours NumberofUnits Disk drives 4,160 380 1,320 11 1,900 1,600 Tape drives 2,500 155 770 6 9,900 4,000 Wire drives 12,700 770 3,900 23 10,400 2,700 Determine the activity rate per production order for…
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Rabia Company has two support departments, Human Resources and Maintenance, and two producing departments, Fabrication and Assembly Support Departments Producing Departments Human Resources Maintenance Fabrication Assembly Budgeted overhead Direct labor hours Machine hours Number of employees $40,000 $72,000 $140,000 $160,000 2,000 2,500 8,000 10,000 12,000 8,000 4 5 15 25 The company only had mixed cost. Human Resource costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours. Predetermined overhead rates for fabrication and assembly are based on direct labor hours. Required: 1. Calculate the allocation ratios. 2. Using the direct method, allocate the costs of the Human Resources and Maintenance deportments to the Fabrication and Assembly departments. Also write the final cost of both the production departments. 3. What if the Maintenance Department had 50 employees? How would that affect the allocation of Human Resources…

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