Bramble 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 $77,000 0.20 0.10 Support Departments Information Systems $110,600 0.10 0.10 Maintenance $62,000 0.10 0.10 Operating Segments Institutional $648,000 $351,000 0.45 0.40 Retail 0.30 0.35 0.30 0.50
Bramble 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 $77,000 0.20 0.10 Support Departments Information Systems $110,600 0.10 0.10 Maintenance $62,000 0.10 0.10 Operating Segments Institutional $648,000 $351,000 0.45 0.40 Retail 0.30 0.35 0.30 0.50
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Bramble 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
$77,000
0.20
0.10
Support Departments
Information
Systems
$110,600
0.10
0.10
Maintenance
$62,000
0.10
0.10
Operating Segments
Institutional
$648,000 $351,000
0.45
0.40
Retail
0.30
0.35
0.30
0.50
Transcribed Image Text:Use Excel to determine the total costs that each operating segment would be accountable for if support costs are allocated using
the reciprocal method. (Round answers to 2 decimal places, e.g. 15.25.)
Total costs
$
Institutional
Operating Units
Retail
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