EXERCISE 4B-2 Step-Down Method [LO11]University District Co-op, a whole foods grocery and coffee shop, has provided the following datato be used in its service department cost allocations:Service DepartmentsOperating DepartmentsBuildingCoffeeAdministrationServicesGroceriesShopDepartmental costs beforeallocations...$200,000$60,000$3,860,000$340,000Employee-hours...Space occupied in squarefeet ...4803202,7201608001,2009,500500Required:Using the step-down method, allocate the costs of the service departments to the two operatingdepartments. Allocate the costs of the Administration Department first on the basis of employee-hours and then the costs of the Building Services Department on the basis of space occupied.

The costs are allocated using various methods as direct allocation, step down method, or reciprocal…

Answered: EXERCISE 4B-2 Step-Down Method [LO11]…

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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Y2 Part 1 Clean−It−Up, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2020, budgeted fixed manufacturing overhead cost was$18,000,000. Budgeted variable manufacturing overhead was $8 per machine-hour. The denominator level was 1,000,000 machine-hours.
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3-32 Drop a division relevant cost Johnny's Bar and Restaurant (JBR) offers three areas to its cus tomers: bar, restaurant, and games. Johnny is concerned about the following division income statement recently prepared by his accountant: Revenue. Variable costs. Contribution margin Fixed cost.. Division contribution. Revenue Variable costs RESTAURANT $220,000 80,000 Contribution margin Avoidable fixed cost $140,000 120,000 $ 20,000 Division contribution. Fixed cost allocated Division contribution. RESTAURANT $220,000 80,000 BAR $180,000 60,000 Johnny feels that these results confirm his intuition that the games area should be closed and the restaurant and bar areas expanded. $140,000 100,000 $120,000 70,000 $ 50,000 Required (a) Based on this information, would you recommend that Johnny close the games area? (b) Suppose now that the fixed costs in the above exhibit are comprised of two components costs that can be eliminated if each area is closed and ongoing costs that can only be…
Homework i d nces Ic raw ill Q Problem 11-22A (Algo) Cost behavior and averaging LO 11-1, 11-2 Janice Huffman has decided to start Jordan Cleaning, a residential housecleaning service company. She is able to rent cleaning equipment at a cost of $750 per month. Labor costs are expected to be $70 per house cleaned and supplies are expected to cost $7 per house. Required a. Determine the total expected cost of equipment rental and the average expected cost of equipment rental per house cleaned, assuming that Jordan Cleaning cleans 25, 35, or 45 houses during one month. Is the cost of equipment a fixed or a variable cost? b. Determine the total expected cost of labor and the average expected cost of labor per house cleaned, assuming that Jordan Cleaning cleans 25, 35, or 45 houses during one month. Is the cost of labor a fixed or a variable cost? c. Determine the total expected cost of supplies and the average expected cost of supplies per house cleaned, assuming that Jordan Cleaning…
Problem 2-19A (Algo) Context-sensitive nature of cost behavior classifications LO 2-1 Vernon Bank's start-up division establishes new branch banks. Each branch opens with three tellers. Total teller cost per branch is $96,000 per year. The three tellers combined can process up to 85,000 customer transactions per year. If a branch does not attain a volume of at least 55,000 transactions during its first year of operations, it is closed. If the demand for services exceeds 85,00O transactions, an additional teller is hired and the branch is transferred from the start-up division to regular operations. Required a. What is the relevant range of activity for new branch banks? b. Determine the amount of teller cost in total and the average teller cost per transaction for a branch that processes 55,000, 65,000, 75,000, or 85,000 transactions. In this case (the activity base is the number of transactions for a specific branch), is the teller cost a fixed or a variable cost? c. Determine the…
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Exercise 5-11A Allocating facility-level costs and a product elimination decision Blevins Boards produces two kinds of skateboards. Selected unit data for the two boards for the last quarter follow. Production costs Direct materials Direct labor Allocated overhead Total units produced and sold Total sales revenue Basco Boards Shimano Boards Required a. Compute the per-unit cost for each product. b. Compute the profit for each product. $25 $32 $15 5,000 $ 500,000 $38 $54 $18 10,000 $1,400,000 Blevins allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount to $54,000 per quarter, to the two products equally.
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