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

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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