EXERCISE 9. 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: Support Departments Рower P150,000 2,000 2,000 General Factory P160,000 1,000 1,700 Operating Divisions Pottery P98,000 6,900 4,000 Retail P56,000 3,100 6,000 Overhead costs Machine hours Square footage Round all allocation ratios to four significant digits and all allocated amounts to nearest peso. 1. Allocate the support service costs using the direct method. 2. Allocate the support service costs using the sequential method. The support departments are ranked in order of highest cost to lowest cost. 3. Allocate the support service costs using the reciprocal method.

EXERCISE 9. 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: Support Departments Рower P150,000 2,000 2,000 General Factory P160,000 1,000 1,700 Operating Divisions Pottery P98,000 6,900 4,000 Retail P56,000 3,100 6,000 Overhead costs Machine hours Square footage Round all allocation ratios to four significant digits and all allocated amounts to nearest peso. 1. Allocate the support service costs using the direct method. 2. Allocate the support service costs using the sequential method. The support departments are ranked in order of highest cost to lowest cost. 3. Allocate the support service costs using the reciprocal method.

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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