Beckett works for Bramble Inc., which produces stuffed animals and dolls in the likeness of customers' pets or loved ones. This way, they can always be together, even when they're apart. To make sure the full cost of making and selling these products is correctly determined, Beckett must carefully assign the support department costs to the operating departments. At the end of the year, these costs are compared to revenues from each segment for profitability analysis. If product categories did not generate as much profit margin as management had hoped, then selling prices and costs are adjusted to manage the margins for next year. Here is the information he has gathered: • Total support department costs: HR, $95,200; Legal, $108,640. • Total costs in the Animals segment are $652,000, while total costs in the Dolls segment are $519,000. (a) HR provides support to Legal, in addition to the Animals and Dolls segments: 20%, 35%, and 45%, respectively. Legal also provides support to HR and to the Animals and Dolls segments: 30%, 20%, and 50%, respectively. (b) Determine the total costs in each operating department after allocating support costs using the step method (rank support departments by the percentage of service they provide to the other support department). Operating Segments Animals Dolls Totals $ +A +A Total costs
Beckett works for Bramble Inc., which produces stuffed animals and dolls in the likeness of customers' pets or loved ones. This way, they can always be together, even when they're apart. To make sure the full cost of making and selling these products is correctly determined, Beckett must carefully assign the support department costs to the operating departments. At the end of the year, these costs are compared to revenues from each segment for profitability analysis. If product categories did not generate as much profit margin as management had hoped, then selling prices and costs are adjusted to manage the margins for next year. Here is the information he has gathered: • Total support department costs: HR, $95,200; Legal, $108,640. • Total costs in the Animals segment are $652,000, while total costs in the Dolls segment are $519,000. (a) HR provides support to Legal, in addition to the Animals and Dolls segments: 20%, 35%, and 45%, respectively. Legal also provides support to HR and to the Animals and Dolls segments: 30%, 20%, and 50%, respectively. (b) Determine the total costs in each operating department after allocating support costs using the step method (rank support departments by the percentage of service they provide to the other support department). Operating Segments Animals Dolls Totals $ +A +A Total costs
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Beckett works for Bramble Inc., which produces stuffed animals and dolls in the likeness of customers' pets or loved ones. This way,
they can always be together, even when they're apart.
To make sure the full cost of making and selling these products is correctly determined, Beckett must carefully assign the support
department costs to the operating departments. At the end of the year, these costs are compared to revenues from each segment for
profitability analysis. If product categories did not generate as much profit margin as management had hoped, then selling prices and
costs are adjusted to manage the margins for next year. Here is the information he has gathered:
•
Total support department costs: HR, $95,200; Legal, $108,640.
•
Total costs in the Animals segment are $652,000, while total costs in the Dolls segment are $519,000.
(a)
HR provides support to Legal, in addition to the Animals and Dolls segments: 20%, 35%, and 45%, respectively. Legal also
provides support to HR and to the Animals and Dolls segments: 30%, 20%, and 50%, respectively.
(b)
Determine the total costs in each operating department after allocating support costs using the step method (rank support
departments by the percentage of service they provide to the other support department).
Operating Segments
Animals
Dolls
Totals
$
+A
+A
Total costs
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