Departmental costs before allocations Employee-hours Space occupied-square feet Service Departments Administration $ 200,000 490 1,000 Janitorial $ 50,000 340 1,100 Operating Departments Groceries $ 3,850,000 2,680 9,100 Gifts $ 330,000 180 900 Required: Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the basis of employee-hours and then Janitorial on the basis

Departmental costs before allocations Employee-hours Space occupied-square feet Service Departments Administration $ 200,000 490 1,000 Janitorial $ 50,000 340 1,100 Operating Departments Groceries $ 3,850,000 2,680 9,100 Gifts $ 330,000 180 900 Required: Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the basis of employee-hours and then Janitorial on the basis

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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Check image file for question Q1a. Allocate the service department costs to the two operating departments using the direct method. b.Allocate the service department cost to the two operating departments using ,I)the step-down method (Allocate administrative service first) . ii)the step down method (Allocoate Maintenance service first) c. Assuming you are the manager of the Daily Patient department.Discuss which method of cost allocation would you prefer.Justify your decision d.Mr Smith the financial controller of LabAid is convinced that the step-down method allocates more costs to the operating departments than the direct method.Do you agree with ,Mr Smith.Explain.
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Required: Rank the support departments based on the percentage of their services provided to other support departments. Use this ranking to allocate the support departments’ costs to the operating departments based on the step-down method.
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Required information Skip to question [The following information applies to the questions displayed below.] Zenon Computer competes at the retail level on the basis of customer service. It has invested significant resources in its customer service department. Recently, the company has installed a traditional activity-based costing (ABC) system to provide better cost information for pricing, decision making, and customer profitability analysis. Most of the costs of running the customer service department are considered committed (i.e., short-term fixed) costs (principally, personnel and equipment costs). The budgeted cost for the upcoming period is $832,000. Activity analysis, recently conducted when the ABC system was implemented, revealed the following information: Activities Percentage of Employee Time Estimated (Budgeted) Cost Driver Quantity Handling customer orders 75% 8,320 customer orders Processing customer complaints 10 416 customer complaints Conducting customer credit checks…
How does activity-based costing differ from traditional costing systems? Can you please create a brief outline by identifying 1 or 2 examples of a restaurant using an ABC system at a customer level, group level, service level, and facility level? PLEASE BE ORIGINAL IN YOUR ANSWER.
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Strathmore University can use various cost centres and cost units for cost estimation purposeswithin its cost accounting information system.i) Explain the distinction between a cost centre and a cost unit as used in cost accountingand give two examples of cost centres and two examples of cost units that Strathmore mayuse within its cost accounting information system
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