Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments(Processing, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded:SupplyingUsing DepartmentDepartmentProcessingAdministration MaintenanceBranchesElectronicProcessingAdministration060%20%20%Maintenance815%е60%40%15%20%50%Direct cost$99,000$690,000$410,000$5,900,000$2,450,000Required:Allocate the service department costs to the two operating departments using the reciprocal method.MaintenanceProcessingAdministrationTotalAllocated to:CostsProcessingAdministration BranchesElectronic

Reference:Bonner, B. (2023, January 1). 10.4 The reciprocal method. Pressbooks.…

Answered: Great Eastern Credit Union (GECU) has…

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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Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Supplying Department Engineering Administration Maintenance 50% Using Department Engineering Administration Maintenance Fabrication Assembly Ө 10% 0 0 20% 0 20% 0 10% 40% 50% 20% 20% 60% Direct cost $28,000 $217,600 $25,000 $195,000 $50,000 Required: Allocate the service department costs to the two operating departments using the reciprocal method. (Do not round intermediate calculations.) Engineering Administration Maintenance Total Costs Allocated to: Fabrication Assembly $ 0 $ 0
ndi Systems Inc., headquartered in Bengaluru, India, provides specialized information technology (IT) services and consists of three divisions: (1) insurance, (2) retail and (3) hospitality. For 2023, it recorded the following data: Insurance Retail Hospitality Total Sales revenues $ 4,017,000 $ 5,824,000 $ 1,944,000 $ 11,785,000 Variable costs (% of sales) 30 % 41 % 44 % Traceable fixed costs 2,121,000 2,852,000 724,500 5,697,500 Common fixed costs 1,200,000 Required: 1. Prepare a segment performance report showing the segment margin in dollars and percentages for all three divisions. Use Exhibit 12–3 as a guide. (Round "Percentage" answers to 2 decimal places.) 2. Which segment is most profitable? multiple choice Insurance Retail Hospitality
The centralized employee travel department of Bourgeois Company has costs of $405,600. The department has serviced a total of 3,900 travel reservations for the period. The South Division has made 2,260 reservations during the period, and the West Division has made 1,640 reservations. Additional data for the two divisions is following below: SouthDivision WestDivision Sales $3,150,470 $2,929,810 Cost of goods sold 1,638,240 1,669,990 Selling expenses 786,360 718,100
Nicholas Technologies operates two divisions. Hardware Services and Software Services. During the current month, the two divisions reported the following results. Hardware Sales Varlable costs (as a percentage of sales) Traceable fixed costs Software $ 850, 000 45% $ 125, 000 $ 660, 000 40% $ 250,000 In addition, fixed costs common to both divisions amounted to $228,000. Prepare an income statement showing percentages as well as dollar amounts. Conclude your statement with income from operations for the business and with the responsibility margin for each division. (Round percentage answers to 2 decimal place. i.e. 0.1234 should be considered as 12.34%.) NICHOLAS TECHNOLOGIES Responsibility Income Statement For the Current Month Entire Company Hardware Servicos Division Software Services Division Percent of Sales Dollars Dollars Percent of Sales Dollars Percent of Sales
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Aquaria, Co. reported the following accounting data. Sales quantity Sales Direct material Direct labor Manufacturing overhead Selling and Admin. Expenses Total fixed costs per month are $66,000 $12,000 $13,800 $1,800 1,000 $66.00 per unit $12.00 $4.00 $3.00 per unit $7.20 per unit $1,800 per month $12,000 per month
Arctic Tundra Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Used by Department Support Dept. S1 S2 P1 P2 S1 - 10% 40% 50% S2 20% - 50% 30% Direct costs $4,500 $8,000 $10,000 $15,000 Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. Also show the total costs for each producing department. Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The size of the direct costs of the department determines the order of allocation. Also show the total costs for each producing department.
The most recent monthly income statement for Benner Stores is given below: Total Store A Store B Sales $1,000,000 $400,000 $600,000 Variable expenses 580,000 160,000 420,000 Contribution margin 420,000 240,000 180,000 Traceable fixed expenses 300,000 100,000 200,000 Store segment margin 120,000 140,000 (20,000) Common fixed expenses 50,000 20,000 30,000 Net operating income $70,000 $120,000 $(50,000) Due to its poor showing, consideration is being given to closing Store B. Studies show that if Store B is closed, one-half of its traceable fixed expenses will continue unchanged. The studies also show that closing Store B would result in a 20 percent decrease in sales in Store A. The company allocates common fixed expenses to the stores on the basis of sales dollars. Required: Determine the monthly financial advantage (disadvantage) of closing Store B. What should…
Morrell Financial Services (MFS) has three service departments: Accounting, Information Technology (IT), and Personnel. MFS also has two operating departments (Advice and Brokerage). Data on service department usage and service direct costs follow: Accounting IT Personnel Direct cost Using Department Accounting IT Personnel Advice 0% 16% 6% 23% 31% Brokerage 40% 0% 10% 29% 45% 11% 13% 0% 39% 37% $ 197,000 $ 281,000 $ 264,500 NA NA* *Not applicable for this problem. Required: Assume that Morrell Financial Services uses the reciprocal method of service department cost allocation. What is the total service department cost allocated to Advice? To Brokerage? (Hint: Use the reciprocal method spreadsheet shown in Exhibit 11.22 as a start to your analysis.) Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollars. Advice Brokerage Cost Allocated
PROBLEMS Note the following information concerning the direct costs of each of the following four departments: 1) Supplied by: HR PM Human Resources $ 975,000 A) B) C) D) Human Resources Plant Maintenance $1,300,000 Plant Maintenance 15% Cutting Polishing $7,685,000 $8,755,000 15% Based on the above information, prepare the following Allocate costs by the direct method. Cutting 50% 45% Polishing 35% 40% Allocate costs by the step-down method (Human Resources first) Allocate costs by the step-down method (Plant Maintenance first) Allocate costs by the reciprocal method
Service Department Cost Allocation Overhead rate per hour, etching: $10.602 (rounded) Maintenance department costs allocated to finishing: $87,111Using Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people, and the Finishing Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Etching Department are budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service departments, Maintenance and Computing, directly support the two production departments. These service departments have budgeted costs of $48,000 and $250,000, respectively. The production departments’ overhead rates cannot be determined until the service departments’ costs are allocated. The following schedule reflects the use of the Maintenance Department’s and…
4 Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT Accounting HR IT -- Service department costs IT allocation Accounting allocation HR allocation Total costs allocated 0% 10% Accounting HR 0% 20% 0% -- 10% $ -- The direct costs of the service departments in the previous period were $91,000 for IT, $116,000 for Accounting, and $155,000 for HR. IT West 40% 40% 60% Required: Use the direct method to allocate the service department costs to the production departments. Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. East 40% 60% 20% Accounting 0 $ 0 $ Check my work HR 0 $ West 0 $ East 0

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