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 Total Labor Hours Used by Departments Sourcing Operations 20,000 10,000 Assembly 40,000 60,000 Finishing 60,000 50,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Departmental Costs $210,000 280,000 440,000 285,000 $ 1,215,000 Finishing Total Required: 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 answers to nearest whole dollar amount.) Direct Method Assembly Finishing Answer is complete but not entirely correct. Total Service Department Cost Allocated Total Production Cost $ 236,727 $ 676,727 253,273 538,273 b. Step Method Assembly 241,818 681,818 Finishing 248,182 533,182 c Reciprocal Method Assembly 268,856 708,886 Finishing 287,170 ( 572,170
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 Total Labor Hours Used by Departments Sourcing Operations 20,000 10,000 Assembly 40,000 60,000 Finishing 60,000 50,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Departmental Costs $210,000 280,000 440,000 285,000 $ 1,215,000 Finishing Total Required: 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 answers to nearest whole dollar amount.) Direct Method Assembly Finishing Answer is complete but not entirely correct. Total Service Department Cost Allocated Total Production Cost $ 236,727 $ 676,727 253,273 538,273 b. Step Method Assembly 241,818 681,818 Finishing 248,182 533,182 c Reciprocal Method Assembly 268,856 708,886 Finishing 287,170 ( 572,170
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
None
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.
Total Labor Hours Used by Departments
Sourcing
Sourcing
Operations
Operations
20,000
10,000
Assembly
40,000
60,000
Finishing
60,000
50,000
The costs incurred in the plant are as follows:
Departments
Sourcing
Operations
Assembly
Departmental
Costs
$210,000
280,000
440,000
285,000
$ 1,215,000
Finishing
Total
Required:
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 answers to nearest whole dollar amount.)
Direct Method
Assembly
Finishing
Answer is complete but not entirely correct.
Total Service
Department
Cost
Allocated
Total
Production
Cost
$ 236,727 $ 676,727
253,273
538,273
b.
Step Method
Assembly
241,818
681,818
Finishing
248,182
533,182
c
Reciprocal Method
Assembly
268,856
708,886
Finishing
287,170 (
572,170
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education