Houa Manufacturing has two support departments: Human Resources and Facilities. Houa has two production departments: Fabrication and Assembly. Actual data for eachdepartment is as follows:# EmployeesN/A| 250DepartmentSq. FeetHuman Resource801FacilitiesN/AFabrication7505,073Assembly1,5007,476Human Resources costs equal $360,000 and are allocated based on the number (#) of Employees. Facilities costs equal $475,000 and are allocated based on Square (Sq.) Feet.Houa is determining the ranking of support department costs for the step-down allocation method and will use the percentage of services rendered to the supportadepartments. Calculate the percentage of support department services rendered to each other and rank the support department to be allocated first when using the step-downmethod.b. Independent of the answer in part b. and using the step-down method, calculate the allocation of support department costs to the production departments Fabrication andAssembly respectively, allocating the Facilities department first.c. Why is cost allocation to products within government agencies an important ethical issue?

The operating departments deal into production and directly add the value to output. However, the…

Answered: Houa Manufacturing has two support…

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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The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. Product Number of Units Labor HoursPer Unit Machine HoursPer Unit Blinks 1,200 4 5 Dinks 1,862 7 9 All of the machine hours take place in the Fabrication department, which has an estimated overhead of $115,200. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $86,300. The Ramapo Company uses a single overhead rate to apply all overhead costs based on labor hours. What is the overhead cost per unit for Dinks?
Webster Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry hours $250,000 10,000 hours Account billing lines $125,000 5,000,000 lines Account verification accounts $50,000 50,000 accounts Correspondence letters $ 25,000 5,000 letters Total costs $450,000 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 1,000 hours 3,000 hours Account billing lines 200,000 lines 300,000 lines Account verification accounts 10,000 accounts 8,000 accounts Correspondence letters 1,000 letters 1,500 letters How much of the account inquiry cost will be assigned to Department A? Group of answer choices $5,000 $250,000 $75,000 $25,000
Aleutian Company produces two products: Rings and Dings. They are manufactured in two departments: Fabrication and Assembly. Data for the products and departments are listed below. Number of Direct Labor Hours Machine Hours Product Units per Unit per Unit Rings 1,000 4. 6. Dings 2,000 All of the machine hours take place in the Fabrication Department, which has estimated total factory overhead of $90.000. All of the labor hours take place in the Assembly Department, which has estimated total factory overhead of $105.000. Aleutian Company uses the multiple production department factory overhead rate method. The Fabrication Department uses machine hours as an allocation base, and the Assembly Department uses direct labor hours. The total factory overhead allocated per unit of Rings is 3.
The following departmental information is for the four departments at Samoa Industries. Departmental Total Cost Cost Driver Square Feet Number of Employees Janitorial $150,000 Square footage serviced 200 40 Cafeteria 50,000 Number of employees 20,000 12 Cutting 1,125,000 4,000 120 Assembly 1,100,000 16,000 40 The Janitorial and Cafeteria departments are support departments. Samoa uses the sequential method to allocate support department costs, first allocating the costs from the Janitorial Department to the Cafeteria, Cutting, and Assembly departments. Question Content Area 1. Determine the dollar amount of the Janitorial Department costs to be allocated to the (a) Cafeteria, (b) Cutting, and (c) Assembly departments. Department Amount a. Cafeteria Department fill in the blank 1 of 3$ b. Cutting Department fill in the blank 2 of 3$ c. Assembly Department fill in the blank 3 of 3$…
Founder Consulting Corporation has its headquarters in Memphis and operates from three branch offices in Nashville, Atlanta, and Louisville. Two of the company's activity cost pools are Administrative Service and Development Service. These costs are allocated to the three branch offices using an activity-based costing system. Information for next year follows: Activity Cost Pool Activity Measure Estimated Cost Administrative service % of time devoted to branch $ 1,680,000 Development service Computer time $ 630,000 Estimated branch data for next year is as follows: Time to branch Computer time Nashville 70 % 1,600,000 minutes Atlanta 20 % 1,200,000 minutes Louisville 10 % 400,000 minutes Total 100 % 3,200,000 minutes How much of the headquarters cost allocation should Nashville expect to receive next year?
Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. Product Number ofUnits Direct Labor HoursPer Unit Machine HoursPer Unit Blinks 1,037 3 7 Dinks 2,059 6 6 All of the machine hours take place in the Fabrication department, which has an estimated overhead of $111,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $88,600. Ramapo Company uses a single plantwide overhead rate to apply all factory overhead costs. The single plantwide rate, if it is based on machine hours instead of labor hours, is a.$23.41 per machine hour b.$12.72 per machine hour c.$8.14 per machine hour d.$10.18 per machine hour
Lock Company has two producing and two service departments labeled P1, P2, S1 and S2, respectively. Direct costs for each department and the proportion of service costs used by the various departments are as follows: (P1, $300,000); (P2, $200,000); (S1, $100,000; S2-25%, P1-50%, P2-25%); (S2, $40,000; S1-10%, P1-50%, P2-40%). What is the total cost of P1 if the costs of service departments are allocated using the direct method? $388,889 $386,111 $386,666 $370,000 P377,778
Company has two production departments; Cutting and Painting, and two service departments Maintenance and design which directly support two production departments. The first level overhead costs of these departments are as follows. Cutting Painting $400,000 Design 640,000 Maintenance 96,000 500,000 The following schedule reflects the use of the Maintenance and Design Departments' output by other departments: Maintenance Maintenance (hours) Design (minutes) 240,000 0 Design 1,000 0 Cutting 1,000 his 840,000 Painting 8,000 120,000 Required 1. Allocate service departments cost to production departments by using direct method and step-down method.
Finest vent Industial Inc. consists of two production departments (Assembly and Machining) and two service departments (Maintenance and Store). The estimated overhead costs and other relevant information for the respective departments are as follows: Assembly Machining Maintenance Store Estimated overhead costs $95,000 $82,000 $46,000 $30,000 Direct labour hours Machine hours 10,000 2,000 5,000 30,000 It has been estimated that each service department does work for other cost centres in the following proportions: Total labour hours used by departments Assembly Machining Maintenance Store Maintenance to Store to 50% 60% 50% 30% 10% Required: (Show all workings clearly and round all solutions to 2 decimal places) (a) Calculate the total overhead costs for the Machining and Assembly departments after the re-apportionment of the costs from the service departments. (b) Calculate the department overhead rates for the Machining and Assembly departments using the appropriate bases.
6. A Company has two service departments, Facilities and Human Resources, as well as two line departments, Machining and Assembly. Facilities Department costs are allocated based on square footage and Human Resources Department costs are allocated based on number of employees. The following data was available: Facilities Human Res. Machining $210,000 $180,000 $76,000 1,000 2,000 4,000 30 20 60 8,000 Direct costs Square footage Number of employees Direct labor hours Assembly $85,000 6,000 100 6,000 a) Use the direct method to allocate service department costs to line departments b) Use the step-down method to allocate service department costs to line departments. Start with facilities.
Departmental information for the four departments at Samoa Industries is provided below. Total Cost Cost Driver Square Feet Number of Employees Janitorial $150,000 Square footage serviced 200 40 Cafeteria 50,000 Number of employees 20,000 12 Cutting 1,125,000 4,000 120 Assembly 1,100,000 16,000 40 The Janitorial and Cafeteria departments are support departments. Determine the dollar amount of the Janitorial Department costs to be allocated to the (a) Cutting and (b) Assembly departments using the direct method. a. Cutting Department b. Assembly Department
Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity-cost drivers Account inquiry $320,000 16,000 hours Account billing $200,000 4,000,000 lines Account verification accounts $173,250 70,000 accounts Correspondence letters $24,000 4,000 letters Total costs $717,250 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,700 hours 4,200 hours Account billing lines 950,000 lines 750,000 lines Account verification accounts 8,500 accounts 6,500 accounts Correspondence letters 1,400 letters 1,800 letters How much of the account billing cost will be assigned to Department A? How much of the account verification accounts cost will be assigned to Department B?

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