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Blossom Juice Company produces and distributes concentrated orange juice. It has been operating in years, selling to institutional customers and retail customers. The production departments are supported by the following three services: Administrative, Information Systems, and Maintenance. To date, the accounting team has simply allocated the support costs evenly between the two operating segments in order to determine total costs. Realizing that there are more accurate ways of assigning these costs, the new controller has asked you to prepare support department cost allocations using three other (and arguably more accurate) methods, Financial information is as follows. Support Departments Information Systems Original costs Administrative $74,000 $109,900 Maintenance $58,000 Operating Segments Institutional Retail $648,000 $350,000

Blossom Juice Company produces and distributes concentrated orange juice. It has been operating in years, selling to institutional customers and retail customers. The production departments are supported by the following three services: Administrative, Information Systems, and Maintenance. To date, the accounting team has simply allocated the support costs evenly between the two operating segments in order to determine total costs. Realizing that there are more accurate ways of assigning these costs, the new controller has asked you to prepare support department cost allocations using three other (and arguably more accurate) methods, Financial information is as follows. Support Departments Information Systems Original costs Administrative $74,000 $109,900 Maintenance $58,000 Operating Segments Institutional Retail $648,000 $350,000

FINANCIAL ACCOUNTING
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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Blossom Juice Company produces and distributes concentrated orange juice. It has been operating in two key customer segments for years, selling to institutional customers and retail customers. The production departments are supported by the following three services: Administrative, Information Systems, and Maintenance. To date, the accounting team has simply allocated the support costs evenly between the two operating segments in order to determine total costs. Realizing that there are more accurate ways of assigning these costs, the new controller has asked you to prepare support department cost allocations using three other (and arguably more accurate) methods. Financial information is as follows. Original costs Proportion of Administrative hours used Proportion of Information Systems hours used Proportion of Maintenance hours used Administrative $74,000 0.20 0.10 Support Departments Information Systems $109,900 0.10 0.10 Maintenance $58,000 0.10 0.10 Operating Segments Institutional $648,000 $350,000 0.45 0.40 Retail 0.30 0.35 0.30 0.50
Transcribed Image Text:Blossom Juice Company produces and distributes concentrated orange juice. It has been operating in two key customer segments for years, selling to institutional customers and retail customers. The production departments are supported by the following three services: Administrative, Information Systems, and Maintenance. To date, the accounting team has simply allocated the support costs evenly between the two operating segments in order to determine total costs. Realizing that there are more accurate ways of assigning these costs, the new controller has asked you to prepare support department cost allocations using three other (and arguably more accurate) methods. Financial information is as follows. Original costs Proportion of Administrative hours used Proportion of Information Systems hours used Proportion of Maintenance hours used Administrative $74,000 0.20 0.10 Support Departments Information Systems $109,900 0.10 0.10 Maintenance $58,000 0.10 0.10 Operating Segments Institutional $648,000 $350,000 0.45 0.40 Retail 0.30 0.35 0.30 0.50
(a) Your answer is correct. Determine the total costs that each operating segment would be accountable for if support costs are allocated using the direct method. (Round intermediate calculations to 4 decimal places, e.g. 15.2516 and final answers to 2 decimal places, eg. 15.25.) Operating Segments Total costs (b) eTextbook and Media Institutional Total costs Save for Later 774175 eTextbook and Media $ Determine the total costs that each operating segment would be accountable for if the step method is used to allocate support costs; assume support departments are ranked according to their original cost. (Round Intermediate calculations to 4 decimal places, eg. 15.2516 and final answers to 2 decimal places, e.g. 15.25.) Institutional Retail Operating Segments $ 465725 Attempts: 1 of 3 used Retail Attempts: 0 of 3 used Submit Answer
Transcribed Image Text:(a) Your answer is correct. Determine the total costs that each operating segment would be accountable for if support costs are allocated using the direct method. (Round intermediate calculations to 4 decimal places, e.g. 15.2516 and final answers to 2 decimal places, eg. 15.25.) Operating Segments Total costs (b) eTextbook and Media Institutional Total costs Save for Later 774175 eTextbook and Media $ Determine the total costs that each operating segment would be accountable for if the step method is used to allocate support costs; assume support departments are ranked according to their original cost. (Round Intermediate calculations to 4 decimal places, eg. 15.2516 and final answers to 2 decimal places, e.g. 15.25.) Institutional Retail Operating Segments $ 465725 Attempts: 1 of 3 used Retail Attempts: 0 of 3 used Submit Answer
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