Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has he following labor hours devoted by each of the service departments to the other departments. Sourcing Operations Departments Sourcing Operations Assembly Finishing Total Total Labor Hours Used by Departments Assembly 40,000 60,000 Sourcing 10,000 The costs incurred in the plant are as follows: Departmental Costs Operations 20,000 a Direct Method Assembly Finishing b. Step Method Assembly $ 177,000 225,000 418,000 263,000 $1,083, eee Required: Use four decimal places (e.g. 33.3333 %) in your calculation of percentages. Finishing 66,000 50,000 What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first), and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? For all requirements, do not round intermediate calculations. Round your final answer to nearest whole dollar amount.) Total Service Total Production Dept. Cost Allocated Cost
Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has he following labor hours devoted by each of the service departments to the other departments. Sourcing Operations Departments Sourcing Operations Assembly Finishing Total Total Labor Hours Used by Departments Assembly 40,000 60,000 Sourcing 10,000 The costs incurred in the plant are as follows: Departmental Costs Operations 20,000 a Direct Method Assembly Finishing b. Step Method Assembly $ 177,000 225,000 418,000 263,000 $1,083, eee Required: Use four decimal places (e.g. 33.3333 %) in your calculation of percentages. Finishing 66,000 50,000 What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first), and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? For all requirements, do not round intermediate calculations. Round your final answer to nearest whole dollar amount.) Total Service Total Production Dept. Cost Allocated Cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing
(purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has
the following labor hours devoted by each of the service departments to the other departments.
Sourcing
Operations
Departments
Sourcing
Operations
Assembly
Finishing
Total
Total Labor Hours Used by Departments
Assembly
40,000
60,000
Sourcing
10,000
The costs incurred in the plant are as follows:
Departmental
Costs
Operations
20,000
a. Direct Method
Assembly
Finishing
b. Step Method
Assembly
$ 177,000
225,000
418,000
263,000
$1,083,000
Required:
Use four decimal places (e.g., 33.3333 %) in your calculation of percentages.
1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing
department that provides the greatest percentage of services to other service departments goes first), and (c) the reciprocal method?
2. What are the total costs in the production departments after allocation?
(For all requirements, do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)
Finishing
60,000
50,000
Total Service Total Production
Dept. Cost
Cost
Allocated
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