**Activity-Based Costing for Allen Company**Allen Company has three departments—Lawn, Bush, and Plowing. Allen Company utilizes Activity-Based Costing (ABC) to allocate its three office costs (labor, gas, and invoices) among these departments. Below is the provided information about the office costs and the activity-cost drivers.### Office Costs| Activities | Total Costs | Activity-Cost Drivers ||------------|-------------|-----------------------|| Labor | $320,000 | 8,000 hours || Gas | $36,000 | 6,000 gallons || Invoices | $40,000 | 2,500 invoices || **Total Costs** | **$396,000** | |### Departmental BreakdownThe usage of the above activities by the three departments is as follows:| Activities | Lawn Department | Bush Department | Plowing Department ||------------|-----------------|-----------------|---------------------|| **Labor** | 2,500 hours | 1,200 hours | 4,300 hours || **Gas** | 1,700 gallons | 800 gallons | 3,500 gallons || **Invoices**| 1,600 invoices | 400 invoices | 500 invoices |### Cost Allocation Query**Question:** How much of the total cost will be assigned to the Plowing Department?**Example of Answer Format:** 4000 (No comma, space, decimal point, or $ sign)**Answer:** 21000

The question is based on the concept of Cost Accounting.In order to calculate the total cost…

Allen Company has three departments - Lawn, Bush, and Plowing. Allen Company uses ABC for the allocation of its three office costs (1 gas, invoices) among the three departments. The following information is provided about the office costs: Activities Labor Gas Invoices Total costs Total Costs Labor Gas Invoices $320,000 $36,000 $40,000 $396,000 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

Allen Company has three departments - Lawn, Bush, and Plowing. Allen Company uses ABC for the allocation of its three office costs (1 gas, invoices) among the three departments. The following information is provided about the office costs: Activities Labor Gas Invoices Total costs Total Costs Labor Gas Invoices $320,000 $36,000 $40,000 $396,000 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

(Appendix 4B) Sequential Method of Support Department Cost Allocation Stevenson Company is divided into two operating divisions: Battery and Small Motors. The company allocates power and general factory costs to each operating division using the sequential method. General Factory is allocated first in the sequential method for the company. Support department cost allocations using the sequential method are based on the following data: Support Departments Operating Divisions Overhead costs Machine hours Square footage Direct labor hours Required: Power Allocation ratios for General Factory Battery Power Small Motors $160,000 Allocation ratios for Power 2,000 1,000 General Factory $430,000 1. Calculate the allocation ratios for Power and General Factory. (Note: Carry these calculations out to four decimal places.) 2,000 1,500 Battery $163,000 7,000 7,500 18,000 Small Motors $84,600 1,500 20,000 60,000
Renata Company has four departments: Materials, Personnel, Manufacturing, and Packaging. Information follows. Department Square Feet Asset Values Employees Materials 26 30,000 $ 9,300 Personnel 13 12,000 2,480 Manufacturing Packaging 52 66,000 37,820 39 12,000 12,400 Total 130 120,000 $ 62,000 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 $ 82,700 Number of employees Allocation Base 52,000 Square feet occupied 23,500 Asset values $ 158,200 Allocate each of the three indirect expenses to the four departments.
Great job! 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 D AMOUNT: ??
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs Required: IT HR 0 27 1,400 0 Publishing 1,400 35 Binding 4,200 51 $ 151,000 $ 247,500 $ 430,000 $390,000 Use the direct method to allocate these service department costs to the operating departments. Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Round "Publishing" and "Binding" answers to 2 decimal places. Service department costs IT allocation IT HR Publishing Binding HR allocation Total costs allocated S 0 $ 0 S 0.00 5 0.00
Show Me How Support department cost allocation- Martay Creations produces winter scarves. The scarves are produced in the Cutting and Sewing departments. The Maintenance and Security departments support these production departments, and allocate costs based on machine hours and square feet, respectively. Information about each department is provided in the following table: Department Maintenance Department Security Department Cutting Department Sewing Department Total Cost Number of Employees $2,200 5 4,500 3 21,200 21 24,900 19 Machine Hours 40 Square Feet 600 0 500 3,600 2,400 5,400 3,000 Using the sequential method and allocating the support department with the highest costs first, allocate all support department costs to the production departments. Then compute the total cost of each production department. Cutting Department Sewing Department Production departments' total costs $ D
8. Lisa's Automotive Company has two support departments, Personnel and Maintenance. The Maintenance Department costs of $80,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $20,000 are allocated based on the number of employees. Costs of Departments A and B are $40,000 and $60,000, respectively. Data on standard service hours and number of employees are as follows: Maintenance Dept. Personnel Dept. Production Dept. A Production Dept. B Standard service hours used 200 200 240 160 Number of employees 10 20 40 120 How much of the cost of the Maintenance Department is allocated to Department B using the direct method? Select one: a. $60,000 b. $32,000 c. $12,800 d. $24,000 e. $16,000
Frederick Company has two service departments (Cafeteria Services & Maintenance). Frederick has two production departments (Assembly Department & Packaging Department.) Frederick uses a step allocation method where Cafeteria Services is allocated to all departments and Maintenance Services is allocated to the production departments. All allocations are based on total employees. Cafeteria Services has costs of $195,000 and Maintenance has costs of $255,000 before any allocations. What amount of Maintenance total cost is allocated to the Packaging Department? (round to closest whole dollar) Employees are: Cafeteria Services 3 Maintenance 5 Assembly Department 8 Packaging Department 7
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs. IT HR 0 16 1,525 0 Publishing 2,440 24 $ 152,000 $ 247,950 $ 431,000 Binding 2,135 40 $ 392,500 Woodstock Binding estimates that the variable costs in the IT Department total $112,500, and in the HR Department variable costs to $142,500. Avoidable fixed costs in the IT Department are $18,250. Required: If Woodstock Binding outsources the IT Department functions, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate calculations. × Answer is complete but not entirely correct. Maximum…
Tenet Engineering, Inc. operates two user divisions as separate cost objects. To determine the costs of each division, the company allocates common costs to the divisions. During the past month, the following common costs were incurred: Computer services (85% fixed) Building occupancy 347,000 674,000 Personnel costs 174,000 Total common costs $1,195,000 The following information is available concerning various activity measures and service usages by each of the divisions: Division A Division B Area occupied (square feet) 26,900 53,800 Рayroll $436,000 $236,000 Computer time (hours) Computer storage (megabytes) 280 300 4,400 -0- Equipment value Operating profit (pre-allocations) $205,000 $255,000 $767,500 $707,500 If common computer service costs are allocated using computer time as the allocation basis, what is the computer cost allocated to Division B (rounded to the nearest whole dollar)? Multiple Choice $216,625. $187,736. $180,939. $179,483.
Merlin Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry hours $200,000 10,000 hours Account billing lines $140,000 4,000,000 lines Account verification accounts $75,000 40,000 accounts Correspondence letters $25,000 4,000 letters Total costs $440,000 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,000 hours 4,000 hours Account billing lines 400,000 lines 200,000 lines Account verification accounts 10,000 accounts 8,000 accounts Correspondence letters 1,000 letters 1,600 letters Required: a. How much of the correspondence costs will be assigned to Department B? b. How much of the total costs will be assigned to Department A?
Sequential (Step) Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Number of employees Square footage Human Resources General Factory Direct costs Allocate: General Factory Support Departments Human Resources Human Resources Total after allocation $150,000 1,500 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Calculate the allocation ratios (rounded to six significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Human…
Cordner Corporation has two production departments, P1 and P2, and two service departments, S1 and S2. Direct costs for each department and the proportion of service costs used by the various departments for the month of July are as follows: Proportion of Services Used by: Department Direct costs S1 S2 P1 P2 S1 $ 72,000 0.70 0.10 0.20 S2 $ 157,000 0.20 0.30 0.50 P1 $ 214,000 P2 $ 179,000 Under the step method of allocation, the total amount of service costs allocated to producing departments would be: Multiple Choice $174,000. $178,600. $74,000. $229,000.