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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 10,000 Departments Sourcing Operations Assembly Finishing Total Total Labor Hours Used by Departments Operations 20,000 Assembly 40,000 60,000 Sourcing Operations The costs incurred in the plant are as follows: Departmental Costs $ 198,000 260,000 432,000 277,000 $1,167,000 Finishing 60,000 50,000 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.)

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 10,000 Departments Sourcing Operations Assembly Finishing Total Total Labor Hours Used by Departments Operations 20,000 Assembly 40,000 60,000 Sourcing Operations The costs incurred in the plant are as follows: Departmental Costs $ 198,000 260,000 432,000 277,000 $1,167,000 Finishing 60,000 50,000 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.)

FINANCIAL ACCOUNTING
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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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. Departments Sourcing Operations Assembly Finishing Total Sourcing Operations The costs incurred in the plant are as follows: Sourcing a. Direct Method Assembly Finishing b Stop Method 10,000 Assembly Finishing Total Labor Hours Used by Departments Assembly 40,000 60,000 Assembly Finishing c Reciprocal Method Operations 20,000 Departmental Costs 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.) $ 198,000 260,000 432,000 277,000 $1,167,000 Total Service Department Cost Allocated Finishing 60,000 50,000 Total Production Cost
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. Departments Sourcing Operations Assembly Finishing Total Sourcing Operations The costs incurred in the plant are as follows: Sourcing a. Direct Method Assembly Finishing b Stop Method 10,000 Assembly Finishing Total Labor Hours Used by Departments Assembly 40,000 60,000 Assembly Finishing c Reciprocal Method Operations 20,000 Departmental Costs 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.) $ 198,000 260,000 432,000 277,000 $1,167,000 Total Service Department Cost Allocated Finishing 60,000 50,000 Total Production Cost
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