Carica Company is a manufacturer with two production departments (Machining and Assembly) as well as two support departments (Materials Requisitions and Utility Services). For the last quarter of 2020, Carica's cost records indicate the following: Budgeted overhead costs before any inter- department cost allocations Support work supplied by MR (Number of requisitions) Support work supplied by US (Power costs) SUPPORT (MR) $200,000 0 Materials Utility Requisitions Services (US) $1,000,000 $5,456,000 $7,458,000 $14,114,000 10% 25% 0 PRODUCTION Machining Assembly Total b. Step-down method (allocate MR first) c. Step-down method (allocate US first) d. The Algebraic method. 40% 30% 35% 60% 100% 100% Required: 1. Allocate the two support departments' costs to the two operating departments using the following methods: a. Direct method
Carica Company is a manufacturer with two production departments (Machining and Assembly) as well as two support departments (Materials Requisitions and Utility Services). For the last quarter of 2020, Carica's cost records indicate the following: Budgeted overhead costs before any inter- department cost allocations Support work supplied by MR (Number of requisitions) Support work supplied by US (Power costs) SUPPORT (MR) $200,000 0 Materials Utility Requisitions Services (US) $1,000,000 $5,456,000 $7,458,000 $14,114,000 10% 25% 0 PRODUCTION Machining Assembly Total b. Step-down method (allocate MR first) c. Step-down method (allocate US first) d. The Algebraic method. 40% 30% 35% 60% 100% 100% Required: 1. Allocate the two support departments' costs to the two operating departments using the following methods: a. Direct method
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Provide answers along with the calculation.
Transcribed Image Text:Carica Company is a manufacturer with two production departments (Machining and
Assembly) as well as two support departments (Materials Requisitions and Utility Services).
For the last quarter of 2020, Carica's cost records indicate the following:
Budgeted
overhead costs
before any inter-
department cost
allocations
Support work
supplied by MR
(Number of
requisitions)
Support work
supplied by US
(Power costs)
SUPPORT
(MR)
$200,000
0
Materials Utility
Requisitions Services
(US)
$1,000,000 $5,456,000 $7,458,000 $14,114,000
10%
25%
0
PRODUCTION
Machining Assembly Total
b. Step-down method (allocate MR first)
c. Step-down method (allocate US first)
d. The Algebraic method.
40%
30%
35%
60%
100%
100%
Required:
1. Allocate the two support departments' costs to the two operating departments using the
following methods:
a. Direct method
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