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 10,000 Departments Sourcing Operations Assembly Finishing Total Total Labor Hours Used by Departments Assembly Operations 20,000 40,000 60,000 Sourcing Operations The costs incurred in the plant are as follows: Departmental Costs $ 210,000 280,000 440,000 285,000 $ 1,215,000 Finishing 60,000 50,000 Required: . 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 he 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 Assembly Operations 20,000 40,000 60,000 Sourcing Operations The costs incurred in the plant are as follows: Departmental Costs $ 210,000 280,000 440,000 285,000 $ 1,215,000 Finishing 60,000 50,000 Required: . 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.)
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 8E
Related questions
Question
![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
Sourcing
10,000
The costs incurred in the plant are as follows:
Departments
Sourcing
Operations
Assembly
Finishing
Total
a Direct Method
Assembly
Finishing
Step Method
Assembly
Finishing
c. Reciprocal Method
Total Labor Hours Used by Departments
Operations
20,000
b.
Assembly
Finishing
Departmental
Costs
$ 210,000
280,000
440,000
285,000
1,215,000
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.)
Assembly
40,000
60,000
Total Service
Department Cost
Allocated
Finishing
60,000
50,000
Total Production
Cost](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F063683ca-3f8f-4ea9-aad2-4f6be390f41d%2Fb9eb21c2-9903-4927-b787-056a8431acba%2F9kc305_processed.png&w=3840&q=75)
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
Sourcing
10,000
The costs incurred in the plant are as follows:
Departments
Sourcing
Operations
Assembly
Finishing
Total
a Direct Method
Assembly
Finishing
Step Method
Assembly
Finishing
c. Reciprocal Method
Total Labor Hours Used by Departments
Operations
20,000
b.
Assembly
Finishing
Departmental
Costs
$ 210,000
280,000
440,000
285,000
1,215,000
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.)
Assembly
40,000
60,000
Total Service
Department Cost
Allocated
Finishing
60,000
50,000
Total Production
Cost
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