costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Personnel Variable costs Fixed costs Total costs Avoidable fixed costs Legal Personnel $ 125,000 175,000 $ 300,000 $50,000 40 0 120 0 10,800 $ 300,000 5,400 $ 1,200,000 $ 160,000 Baldwin Enterprises estimates that the cost structure in its operations is as follows: Eastern Legal $ 41,000 119,000 $ 160,000 $ 20,000 Eastern $ 870,000 330,000 $ 1,200,000 $ 150,000 Western 40 1,800 $ 790,000 Western $ 560,000 230,000 $ 790,000 $ 150,000 Required: a. If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs? b. If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs? c. If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor without increasing total costs?

costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Personnel Variable costs Fixed costs Total costs Avoidable fixed costs Legal Personnel $ 125,000 175,000 $ 300,000 $50,000 40 0 120 0 10,800 $ 300,000 5,400 $ 1,200,000 $ 160,000 Baldwin Enterprises estimates that the cost structure in its operations is as follows: Eastern Legal $ 41,000 119,000 $ 160,000 $ 20,000 Eastern $ 870,000 330,000 $ 1,200,000 $ 150,000 Western 40 1,800 $ 790,000 Western $ 560,000 230,000 $ 790,000 $ 150,000 Required: a. If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs? b. If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs? c. If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor without increasing total costs?

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...

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A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The building maintenance department services all departments of the company, and its costs are allocated using floor space occupied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting Domestic International Employees — 25 15 60 Transactions 50,000 — 10,000 40,000 Department direct costs $ 56,000 $ 21,000 $ 155,000 $ 590,000 BluStar estimates that the cost structure in its operations is as follows. Administration Accounting Domestic International Variable costs $ 22,000 $ 5,800 $ 114,500 $ 429,000 Fixed costs 34,000 15,200 40,500 161,000 Total costs $ 56,000 $ 21,000 $ 155,000 $ 590,000 Avoidable fixed costs $ 10,000 $ 4,000 $ 18,500 $ 110,500 Required: a. If BluStar outsources the Administration Department, what is…
Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Personnel 120 10,800 $ 300,000 5,400 $ 1,200,000 $ 160,000 Baldwin Enterprises estimates that the cost structure in its operations is as follows: Employees Hours Department direct costs Variable costs Fixed costs Total costs Avoidable fixed costs Personnel $200,000 250,000 $ 450,000 $ 65,000 Required A Required B Required C Legal Maximum amount 40 0 Legal $ 56,000 134,000 $ 190,000 $ 35,000 Eastern Complete this question by entering your answers in the tabs below. Western $575,000 245,000 $ 820,000 $300,000
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Employees Transactions Department direct costs Required A Administration 37,000 $363,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departments using the reciprocal method. Complete this question by entering your answers in the tabs below. Required B Required C From Accounting Domestic International 26 47 22,000 $141,000 $955,000 Department costs Administration allocation Accounting allocation Total cost Allocate the cost…
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Multiple Choice $685 per order $675 per order $544 per order $665 per order
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BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting domestic International Employees – 21 36 43 Transactions 32,000 – 21,000 84,000 Department direct costs 360,000 140,000 $ 935,000 $ 3,730,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method.b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration.c. Allocate the cost of the service departments to the operating departments using the reciprocal method.
Dolphin Company has two service departments, S1 and S2 and three production departments, P1, P2 and P3. The following data relate to Dolphin Company's allocation of service department costs: Number of Employees S1 S2 IP1 P2 P3 O $13,333 The allocation of costs from S2 to S1 would be: O $4,800 Cost O $0 80,000 40,000 100,000 800,000 1,200,000 O $10,000 S1 allocates its costs on the basis of number of employees. S2 allocates its costs on the basis of kilowatt hours. The order of allocation for Dolphin Company is S1 first and S2 second. Dolphin Company uses the direct method to allocate its service department costs. Problem 3-4 2 3 3 6 6 Kilowatt Hours 600 400 500 1,000 2,500
Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Costs Personnel Legal Complete this question by entering your answers in the tabs below. Total Personnel $ Personnel $ 10,800 $ 320,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method. 320,000 $ 320,000 $ Required A Required B Required C Allocate the cost of the service departments to the operating divisions using the reciprocal method. Note: Do not round intermediate calculations. Round your final answers…
Helm Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system: Costs: Manufacturing overhead Selling and administrative expenses Total Distribution of resource consumption: Manufacturing overhead Selling and administrative expenses $304,500 $493,000 Activity Cost Pools Customer Support 85% 20% O $116,000 O $428,000 Order Size 5% 60% S S Other 10% 20% The "Other" activity cost pool consists of the costs of idle capacity and organization-sustaining costs. You have been asked to complete the first-stage allocation of costs to the activity cost pools. How much cost, in total, would be allocated in the first-stage allocation to the Customer Support activity cost 480,000 100,000 580,000 Total 100% 100%