Blue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and Framing production departments are supported by the Janitorial and Security departments. Janitorial costs are allocated to the production departments based on square feet, and security costs are allo- cated based on asset value. Information about these departments is detailed in the following table: Janitorial Security Department Printing Department Framing Department Department Square feet 760 1,040 4,230 4,770 Asset value $900 $1,240 $12,390 $8,610 Department cost $5,200 $6,600 $33,000 $29,000 Management has experimented with different support department cost allocation methods in the past. The different allocation methods did not yield large differences of cost allocation to the pro- duction departments. Instructions 1. Determine which support department cost allocation method Blue Mountain Masterpieces would most likely use to allocate its support department costs to the production departments. 2. Determine the total costs allocated from each support department to each production depart- ment using the method you determined in part (1). 3. Without doing calculations, consider and answer the following: If Blue Mountain Masterpieces decided to use square feet instead of asset value as the cost driver for security services, how would this change the allocation of Security Department costs?
Blue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and Framing production departments are supported by the Janitorial and Security departments. Janitorial costs are allocated to the production departments based on square feet, and security costs are allo- cated based on asset value. Information about these departments is detailed in the following table: Janitorial Security Department Printing Department Framing Department Department Square feet 760 1,040 4,230 4,770 Asset value $900 $1,240 $12,390 $8,610 Department cost $5,200 $6,600 $33,000 $29,000 Management has experimented with different support department cost allocation methods in the past. The different allocation methods did not yield large differences of cost allocation to the pro- duction departments. Instructions 1. Determine which support department cost allocation method Blue Mountain Masterpieces would most likely use to allocate its support department costs to the production departments. 2. Determine the total costs allocated from each support department to each production depart- ment using the method you determined in part (1). 3. Without doing calculations, consider and answer the following: If Blue Mountain Masterpieces decided to use square feet instead of asset value as the cost driver for security services, how would this change the allocation of Security Department costs?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Blue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and
Framing production departments are supported by the Janitorial and Security departments. Janitorial
costs are allocated to the production departments based on square feet, and security costs are allo-
cated based on asset value. Information about these departments is detailed in the following table:
Janitorial
Security
Department
Printing
Department
Framing
Department
Department
Square feet
760
1,040
4,230
4,770
Asset value
$900
$1,240
$12,390
$8,610
Department cost
$5,200
$6,600
$33,000
$29,000
Management has experimented with different support department cost allocation methods in the
past. The different allocation methods did not yield large differences of cost allocation to the pro-
duction departments.
Instructions
1. Determine which support department cost allocation method Blue Mountain Masterpieces
would most likely use to allocate its support department costs to the production departments.
2. Determine the total costs allocated from each support department to each production depart-
ment using the method you determined in part (1).
3.
Without doing calculations, consider and answer the following: If Blue Mountain
Masterpieces decided to use square feet instead of asset value as the cost driver for security
services, how would this change the allocation of Security Department costs?
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