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 Operations Sourcing 10,000 Operations 20,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Finishing Total Departmental Costs $192,000 250,000 428,000 273,000 $1.143,000 Assembly 40,000 60,000 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.) Answer is complete but not entirely correct. Total Service Department Total Production Cost Cost Allocated Direct Method Assembly Finishing Step Method S 213,164 S 641,164 228,836 501,836 Assembly 217,818 645,818 Finishing 224,182 497,182 C Reciprocal Method Assembly 213,859 641,859 Finishing 230.873 503.873
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 Operations Sourcing 10,000 Operations 20,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Finishing Total Departmental Costs $192,000 250,000 428,000 273,000 $1.143,000 Assembly 40,000 60,000 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.) Answer is complete but not entirely correct. Total Service Department Total Production Cost Cost Allocated Direct Method Assembly Finishing Step Method S 213,164 S 641,164 228,836 501,836 Assembly 217,818 645,818 Finishing 224,182 497,182 C Reciprocal Method Assembly 213,859 641,859 Finishing 230.873 503.873
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
Total Labor Hours Used by Departments
Sourcing
Operations
Sourcing
10,000
Operations
20,000
The costs incurred in the plant are as follows:
Departments
Sourcing
Operations
Assembly
Finishing
Total
Departmental
Costs
$ 192,000
250,000
428,000
273.000
$1.143.000
Assembly
40,000
60,000
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.)
Answer is complete but not entirely correct.
Total Service
Department
Cost
Allocated
Total
Production
Cost
a.
Direct Method
Assembly
S
213,164 S
641,164
Finishing
228,836
501,836
b.
Step Method
Assembly
217,818
645,818
Finishing
224,182
497,182
C
Reciprocal Method
Assembly
213,859
641,859
Finishing
230,873
503,873
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