Premium Company provides the following ABC costinginformation:ActivitiesCostsAccount inquiry$200,000Account billing$140,000Activity-cost drivers25,000Account verification accounts$75,000Total costs4,000,000 linesCorrespondence letters10,000 hours40,000 accountsAccount billing lines250,000 linesDepartment BAccount inquiry hourshoursSelect one:4,000 lettersThe above activities are used by Departments A and Bas follows:4,000 hoursAccount verification accountsaccounts8,000 accountsCorrespondence lettersa. $8,750b. $8,500c. $8,250d. $8,540Total1,600 letters$440,000Department2,50010,000400,000 lineslettersHow much of the account billing cost will be assigned toDepartment B1,200

The activity rate is calculated as the estimated cost of activity divided by activity usage. Under…

information: Activities Costs Activity-cost drivers Account inquiry $200,000 Account billing $140,000 25,000 Account verification accounts $75,000 10,000 hours 4,000,000 lines Total costs Correspondence letters 40,000 accounts 4,000 letters Account billing lines 250,000 lines A Department B Account inquiry hours hours The above activities are used by Departments A and B as follows: 4,000 hours Account verification accounts accounts 8,000 accounts Correspondence letters Total 1,600 letters $440,000 Department 2,500 10,000 400,000 lines 1,200 letters How much of the account billing cost will be assigned to Department B

information: Activities Costs Activity-cost drivers Account inquiry $200,000 Account billing $140,000 25,000 Account verification accounts $75,000 10,000 hours 4,000,000 lines Total costs Correspondence letters 40,000 accounts 4,000 letters Account billing lines 250,000 lines A Department B Account inquiry hours hours The above activities are used by Departments A and B as follows: 4,000 hours Account verification accounts accounts 8,000 accounts Correspondence letters Total 1,600 letters $440,000 Department 2,500 10,000 400,000 lines 1,200 letters How much of the account billing cost will be assigned to Department B

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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Service Department Operating Department Physical Administration Assembly $ 127,160 Testing $ 737,860 Plant $ 26,220 $ 78,860 Departmental costs Employee time Space occupied 1,000 1,000 4,000 25,000 12,000 9,000 37,000 6,000 Administration Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied. The total Testing Department cost after allocations is closest to: Multiple Choice $754,279 $757,240 $748,960 $757,368
Travelcraft Company manufactures a complete line of fiberglass suitcases and attaché cases. The firm has three manufacturing departments: Molding, Component, and Assembly. There are also two service departments: Power and Maintenance. The sides of the cases are manufactured in the Molding Department. The frames, hinges, and locks are manufactured in the Component Department. The cases are completed in the Assembly Department. Varying amounts of materials, time, and effort are required for each of the cases. The Power Department and Maintenance Department provide services to the three manufacturing departments. Travelcraft has always used a plantwide overhead rate. Direct-labor hours are used to assign overhead to products. The predetermined overhead rate is calculated by dividing the company's total estimated overhead by the total estimated direct-labor hours to be worked in the three manufacturing departments. Karen Mason, director of cost management, has recommended that Travelcraft…
Active Customer Services Ltd uses a traditional activity-based costing system to assign £900,000 of committed resource costs for customer service on the basis of the following information gathered from interviews with customer service personnel: BMAN21040 ACTIVITY Process sales orderProcess customer complaints Perform customer credit checks Required: TIME ESTIMATED COST DRIVER PERCENTAGE QUANTITY 55% 15,500 customer orders 15% 300 customer complaints 30% 2,000 credit checks 100% a) Compute the activity cost driver rates using this system.
The Xtra Store has a Human Resources Department and a Janitorial Department that provide service to three sales departments. The Human Resources Department cost is allocated on the basis of employees, and the Janitorial Department cost is allocated on the basis of space. The following information is available: Human Resources Janitorial Sales #1 Sales #2 Sales #3 Budgeted cost $ 45,000 $ 30,000 Space in Square Feet 4,000 1,000 20,000 30,000 50,000 Number of employees 5 10 15 45 30 Using the step-down method and assuming that the Human Resources Department is allocated first, the amount of Human Resources cost allocated to Sales Department no. 2 is: $13,500. $20,250. $19,286. $21,316. $22,500.
Answer both parts
The managers of Cheyenne Manufacturing are discussing ways to allocate the cost of service departments, such as quality control and maintenance, to the production departments. To aid them in this discussion, the controller has provided the following information: Quality Control Maintenance Machining Assembly Total Budgeted overhead $374,000 $200,000 $392,000 $272,000 $1,238,000 costs before Allocation Budgeted machine – – 45,000 – 45,000 Hours Budgeted direct – – – 23,000 23,000 labour hours Budgeted hours – 5,000 15,000 5,000 25,000 of service: Quality Control Maintenance 8,000 – 14,400 9,600 32,000
Technology and Personnel, and two operating departments, Prepress and Printing. Service Department Operating Department Information Technology $ 27,412 Printing $ 530,110 Personnel Prepress Departmental costs $ 27,008 $ 376,940 Computer workstations 28 19 51 38 Employees 27 14 98 30 Information Technology Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. The total Prepress Department cost after service department allocations is closest to: Multiple Choice $406,961 $413,326 $402,881 $410,563
BUDGETED DATA: Budgeted machine hours 60,000 machine hours Budgeted direct labor hours 400,000 direct labor hours Budgeted direct labor costs $6,000,000 Budgeted manufacturing overhead costs $10,000,000 Company allocates manufacturing overhead using direct labor hours used ACTUAL DATA: Actual manufacturing overhead costs incurred $9,700,000 Actual machine hours used 62,000 machine hrs used Actual direct labor hours used 380,000 actual DL hours used 1. Calculate budgeted (applied) manufacturing overhead rate per direct labor hour 2. Calculate applied (allocated) manufacturing overhead:
Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Support Departments Producing Departments General Factory Receiving Assembly FinishingDirect overhead $400,000 $170,000 $45,000 $75,000Square footage --- 2,700 5,400 5,400Number of receiving orders 300 — 1,680 1,020Direct labor hours — — 25,000 40,000The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the costs of…
The managers of Cheyenne Manufacturing are discussing ways to allocate the cost of service departments, such as quality control and maintenance, to the production departments. To aid them in this discussion, the controller has provided the following information: Quality Control Maintenance Machining Assembly Total Budgeted overhead $374,000 $200,000 $392,000 $272,000 $1,238,000 costs before Allocation Budgeted machine – – 45,000 – 45,000 Hours Budgeted direct – – – 23,000 23,000 labour hours Budgeted hours – 5,000 15,000 5,000 25,000 of service: Quality Control Maintenance 8,000 – 14,400 9,600 32,000
Question Content Area Given the following information, determine the activity rate for setups. Activity Total Activity-Base Usage Budgeted Activity Cost Setups 10,000 $180,000 Inspections 24,000 $120,000 Assembly (dlh) 80,000 $400,000
Fact Pattern: The managers of Rochester Manufacturing are discussing ways to allocate the cost of service departments, such as Quality Control and Maintenance, to the production departments. To aid them in this discussion, the controller has provided the following information: Budgeted overhead costs before allocation Budgeted machine hours Budgeted direct labor hours Budgeted hours of service: Quality Control Quality Control $350,000 -- Maintenance Machining Assembly Total $200,000 $400,000 $300,000 $1,250,000 50,000 7,000 -- 25,000 50,000 25,000 21,000 7,000 35,000 Maintenance 10,000 18,000 12,000 40,000 Question: 31f Rochester uses the direct method of allocating service department costs, the total service costs allocated to the assembly department would be