Exercise 17-18 Step-Down Method of Service Department Cost Allocation; Bank (LO 17-1) Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments' output for the year is as follows: Provider of Service Computing User of Service HR HR 15% Computing Deposit 10% 60% 50% Loan 30% 35% The budgeted costs in the two service departments for the year are as follows: $153,000 229,500 HR Computing Required: Use the step-down method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan departments. Tuscaloosa National Bank allocates the costs of the HR Department first. (Do not round intermediate calculations.) Deposit Loan Allocation of HR Department costs Allocation of Computing Department costs Total costs allocated to each department 91,800 s 45,900 91,800 S 45,900

Exercise 17-18 Step-Down Method of Service Department Cost Allocation; Bank (LO 17-1) Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments' output for the year is as follows: Provider of Service Computing User of Service HR HR 15% Computing Deposit 10% 60% 50% Loan 30% 35% The budgeted costs in the two service departments for the year are as follows: $153,000 229,500 HR Computing Required: Use the step-down method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan departments. Tuscaloosa National Bank allocates the costs of the HR Department first. (Do not round intermediate calculations.) Deposit Loan Allocation of HR Department costs Allocation of Computing Department costs Total costs allocated to each department 91,800 s 45,900 91,800 S 45,900

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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22. Question Content Area Support Department Allocations The centralized computer technology department of Hardy Company has expenses of $28,000. The department has provided a total of 2,000 hours of service for the period. The Retail Division has used 1,620 hours of computer technology service during the period, and the Commercial Division has used 380 hours of computer technology service. How much should each division be allocated for computer technology department services? Do not round interim calculations. Retail Division $ Commercial Division $
Qc 1.
Problem 1: The IT corporation produces and markets two types of electronic calculators: Model 11 and model 12. The following data were gathered on activities last month. Model 11 Model 12 Sales in units... Selling price per unit.. Variable production costs per unit.. Traceable fixed production costs.. Variable selling expenses per unit.. Traceable fixed selling expenses....... Allocated division administrative expenses.. $50,000 Prepare a segmented income statement in the contribution format for last month 5,000 $50 $10 $100,000 $5 5,000 3,000 $100 $26 $150,000 $6 7,500 $60,000
Question 4:Dhofar Company manufactures two products M1 and Z1. Its sales department has three divisions: Salalah, Raysut and Mirbat. Initial estimates for the sales budgets for the year ending 31 December 2021 which are based on the assessments of the divisional executives are as follows; Product M1 :Salalah 45,000 units: Raysut 110,000 units and Mirbat: 25,000 units Product Z1: Salalah 70,000 units: Raysut 82,000 units and Mirbat:0 Sales Prices: M1: 30MR and Z1= 4 OMR in all areas. Arrangements are made for the extensive advertising of product M1 and Z1 and it is estimated that Salalahdivision sales will increase by 30,000 units. Arrangements are also made to advertise and distribute product z1 in the Mirbatarea in the second half of 2021 when sales are expected to be 100,000 units. Since the estimated sales of the Raysut division represented an unsatisfactory target, it is agreed to increase both the estimates by 15 %. Prepare a sales budget for the year to 31 December 2021.
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Answer question 3-4 using the information below: Fantasy Book and Music Store has two support departments and two production departments. Costs of each department are presented below. Data on budgeted warehouse-hours and number of computer log-on hours for cost allocation of support departments are as follows: Support Departments Production Departments Warehouse Data Center Music Books Budgeted costs Budgeted warehouse-hours Number of computer hours $495,000 1,750 $412,500 3,500 2,800 $1,155,000 $495,000 N/A 5,250 3,500 700 N/A 3. Using the direct method, how much are the total costs of the Books Department? A. $495,000 B. $275,000 C. $693,000 D. $1,463,000 4. Using the step-down method, what amount of Data Center Department cost will be allocated to Music Department if the service department with the highest percentage of interdepartmental support service is allocated first? A. $387,229 B. $220,001 C. $307,267 D. $381,150
Question 3 Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments-administrative services (AS) and information systems (IS) and two operating departments- government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017, Phoenix's cost records indicate the following: SUPPORT OPERATING AS IS GVT CORP TOTAL Budgeted overhead costs $600,000 $2,400,000 $8,756,000 $12,452,000 $24,208,000 before any inter-department cost allocations Support work supplied by 25% 40% 35% 100% AS (budgeted head count) Support work supplied by 10% IS (budgeted time) computer 30% 60% 100% Required: 1. Allocate the two support departments' costs to the two operating departments using the following methods: a. Direct method b. Step-down method (allocate AS first) c. Step-down method (allocate IS first) 2. Compare and explain differences in the support-department costs allocated to each operating department.
Question 19
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Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost Using Department Transactions IT Operations Retail Commercial Ө Ө 70% 30% 10% Ө 20% 30% 40% 50% Ө Ө 10% 40% $ 390,000 $ 810,000 $ 1,650,000 $ 3,850,000 $ 2,400,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. From: Costs Operations Allocated to: Transactions Retail Commercial IT $ 810,000 $ 162,000 $ 81,000 $ 243,000 $ 324,000 Operations Transactions Total $ 243,000 $ 324,000
Question 4: Dhofar Company manufactures two products M1 and Z1. Its sales department has three divisions: Salalah Ravsut and Mirkat. Initial estimates for the sales budgets for the year ending 31 December 2021 which are based on the assessments of the divisional executives are as follows; Product M1 : Şalalah 45,000 units: Raxsut 110,000 units and Mirkat; 25,000 units Product Z1: Salalah 70,000 units: Raysut 82,000 units and Mirbat:0 Sales Prices: M1: 3 OMR and Z1= 4 OMR in all areas. Arrangements are made for the extensive advertising of product M1 and Z1 and it is estimated that Salalah division sales will increase by 30,000 units. Arrangements are also made to advertise and distribute product z1 in the Mirkat area in the second half of 2021 when sales are expected to be 100,000 units. Since the estimated sales of the Ravsut division represented an unsatisfactory target, it is agreed to increase both the estimates by 15 %. Prepare a sales budget for the year to 31 December 2021.