Comparison of Methods of Allocation Duweynie Pottery, Inc., is divided into two operating divisions: Pottery and Retail. The company allocates Power and General Factory department costs to each operating division. Power costs are allocated on the basis of the number of machine hours and general factory costs on the basis of square footage. No effort is made to separate fixed and variable costs; however, only budgeted costs are allocated. Allocations for the coming year are based on the following data: Use the rounded values for subsequent calculations. Support Departments Operating Divisions Pottery Retail Power $140,400 Overhead costs $99,000 $57,000 Machine hours 2,000 7,000 3,000 Square footage 2,500 4,000 6,000 Round all allocation ratios to four significant digits. Round all allocated amounts to the nearest dollar. Required: 1. Allocate the support service costs using the direct method. Note: Input two decimal places. Allocation Ratios Proportion of machine hours Proportion of square footage Cost Allocations Power General Factory Pottery General Factory nnnnn $162,000 2,500 1,700 Pottery 0.70 ✔ 0.40 ✔ Retail 98,280 $ 42,120 64,800 ✔ F 97,200 Retail 0.30 0.60
Comparison of Methods of Allocation Duweynie Pottery, Inc., is divided into two operating divisions: Pottery and Retail. The company allocates Power and General Factory department costs to each operating division. Power costs are allocated on the basis of the number of machine hours and general factory costs on the basis of square footage. No effort is made to separate fixed and variable costs; however, only budgeted costs are allocated. Allocations for the coming year are based on the following data: Use the rounded values for subsequent calculations. Support Departments Operating Divisions Pottery Retail Power $140,400 Overhead costs $99,000 $57,000 Machine hours 2,000 7,000 3,000 Square footage 2,500 4,000 6,000 Round all allocation ratios to four significant digits. Round all allocated amounts to the nearest dollar. Required: 1. Allocate the support service costs using the direct method. Note: Input two decimal places. Allocation Ratios Proportion of machine hours Proportion of square footage Cost Allocations Power General Factory Pottery General Factory nnnnn $162,000 2,500 1,700 Pottery 0.70 ✔ 0.40 ✔ Retail 98,280 $ 42,120 64,800 ✔ F 97,200 Retail 0.30 0.60
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...
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