Hessel Corporation has two operating departments (Domestic and Global) and three service departments: Human Resources (HR), Legal, and Testing. In the most recent period, the following costs and service department usage ratios were recorded: Supplying Department Human Resources Legal Testing Direct cost From: Human Resources Legal Testing Total Human Resources 0 10% 10% Costs $ 264,500 Legal Allocated to: Domestic Using Department Testing 15% 0 0 $ 190,000 Required: Allocate the service department costs to the two operating departments using the reciprocal method. Note: Do not round intermediate calculations. Global 10% 0 0 $ 90,000 Domestic 25% 30% 45% $ 542,000 Global 50% 60% 45% $ 491,000

Hessel Corporation has two operating departments (Domestic and Global) and three service departments: Human Resources (HR), Legal, and Testing. In the most recent period, the following costs and service department usage ratios were recorded: Supplying Department Human Resources Legal Testing Direct cost From: Human Resources Legal Testing Total Human Resources 0 10% 10% Costs $ 264,500 Legal Allocated to: Domestic Using Department Testing 15% 0 0 $ 190,000 Required: Allocate the service department costs to the two operating departments using the reciprocal method. Note: Do not round intermediate calculations. Global 10% 0 0 $ 90,000 Domestic 25% 30% 45% $ 542,000 Global 50% 60% 45% $ 491,000

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...

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Question

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Hessel Corporation has two operating departments (Domestic and Global) and three service departments: Human Resources (HR),
Legal, and Testing. In the most recent period, the following costs and service department usage ratios were recorded:
Supplying Department
Human Resources
Legal
Testing
Direct cost
From:
Human Resources
Legal
Testing
Total
Human Resources
0
10%
10%
Costs
$ 264,500
Legal
Allocated to:
Domestic
Using Department
Testing
15%
0
0
$ 190,000
Required:
Allocate the service department costs to the two operating departments using the reciprocal method.
Note: Do not round intermediate calculations.
Global
10%
0
0
$ 90,000
Domestic
25%
30%
45%
$ 542,000
Global
50%
60%
45%
$ 491,000

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Hessel Corporation has two operating departments (Domestic and Global) and three service departments: Human Resources (HR), Legal, and Testing. In the most recent period, the following costs and service department usage ratios were recorded: Supplying Department Using Department Human Resources Legal Human Resources 0 10% 10% $ 264,500 Legal Testing Direct cost Costs Human resources Legal Testing Total Testing Global 15% 0 0 Domestic 10% 0 0 Global 25% 30% 45% 50% Required: Allocate the service department costs to the two operating departments using the reciprocal method. Note: Do not round intermediate calculations. From Allocated to: Domestic 60% 45% $ 190,000 $90,000 $538,000 $ 487,000
Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows: Department Information Systems (IS) Personnel Administration IS 170 115 3,900 Number of IS service tickets Number of employees Square footage occupied The costs of the service departments and the allocation basis for each department follow. Direct Cost $ 33,000 40,000 36,700 Personnel 200 120 8,000 Administration Residential Commercial 155 1,410 107 138 3,800 16,100 Allocation Base IS service tickets Employees Square footage occupied. 940 162 69,500 Required: a. Assume that the company allocates service department costs to production departments using the direct method. What amount of Information Systems (IS) Department costs will be allocated to the Commercial Department? b. Assume the…
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Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows: IS Personnel Administration Residential Commercial Number of IS service tickets 125 155 110 1,410 940 Number of employees 70 75 62 138 162 Square footage occupied 3,900 8,000 3,800 16,100 69,500 The costs of the service departments and the allocation basis for each department follow. Department Direct Cost Allocation Base Information Systems (IS) $ 24,000 IS service tickets Personnel 31,000 Employees Administration 27,700 Square footage occupied Required: Assume that the company allocates service department costs to production departments using the direct method. What amount of Information Systems (IS) Department costs will be allocated to the Commercial…
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