Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair andQuality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month ofMarch follow:DepartmentFabricatingFinishingRepairQuality ControlFrom:Direct Costs$ 140,60098, 200Service department costsRepairQuality controlTotal42,00078,400RepairRepair00.3Proportion of Services Used byQualityControlFabricating0.30Required:Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.)Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations.Cost Allocation To:QualityControl0.40.2FinishingFabricating0.30.5Finishing

The various methods for cost allocation are direct, step and reciprocal method. Using reciprocal…

Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Department Fabricating Finishing Repair Quality Control From: Service department costs Direct Costs Repair Control $ 140,600 98, 200 42,000 78,400 Proportion of Services Used by Quality 0 0.3 Repair 0.3 0 Required: Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Fabricating Finishing Quality Control Cost Allocation To: 0.4 0.2 0.3 0.5 Fabricating Finishing

Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Department Fabricating Finishing Repair Quality Control From: Service department costs Direct Costs Repair Control $ 140,600 98, 200 42,000 78,400 Proportion of Services Used by Quality 0 0.3 Repair 0.3 0 Required: Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Fabricating Finishing Quality Control Cost Allocation To: 0.4 0.2 0.3 0.5 Fabricating Finishing

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. 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?…
Angle Max Industries produces a product which goes through two operations, Assembly and Finishing, before it is ready to be shipped. Next year's expected costs and activities are shown below. Direct labor hours Machine hours Overhead costs Multiple Choice Assume that the Assembly Department allocates overhead using a plantwide overhead rate based on machine hours. How much total overhead will be assigned to a product that requires 2 direct labor hour and 3.30 machine hours in the Assembly Department, and 4.50 direct labor hours and 0.4 machine hours in the Finishing Department? O$17.60. Assembly 180,000 DLH 380,000 MH $380,000 $20.40. Finishing 148,000 DLH 91, 200 MH $562, 400
Fisher Fixtures manufactures three types of lighting fixtures, with model names of Silver, Gold, and Platinum. It applies all indirect costs according to an annual predetermined rate based on direct labor-hours. The plant controller has recommended that the company switch to an activity-based costing system. The controller's staff prepared the following cost estimates for next year (year 2) for the recommended cost drivers. Activity Recommended Cost Driver Estimated Cost Estimated Cost Driver Activity Purchasing material Number of purchase orders $ 130,800 240 purchase orders Receiving material Direct materials cost 238,400 $ 2,980,000 Setting up equipment Number of production runs 231,840 120 runs Machine depreciation and maintenance Machine-hours 80,260 16,052 hours Ensuring regulatory compliance Number of inspections 459,000 54 inspections Shipping Number of units shipped 1,087,200 604,000 units Total estimated cost $ 2,227,500 In addition, management…
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Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Department Machining Assembly Maintenance Cafeteria Direct Costs $115,000 65,000 54,000 43,000 Required A Required B Proportion of Services Used by Machining Maintenance Cafeteria 0.7 From Service department costs Maintenance Cafeteria Total Costs 0.2 Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Maintenance. b. The allocations are made in the reverse order (starting with Cafeteria). 0.5 0.1 Complete this question by entering your answers in the tabs below. Maintenance Cafeteria Assembly The order of allocation starts with Maintenance. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) To 0.3 0.2 Machining…
Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Department Fabricating Finishing Repair Quality Control From: Direct Costs Repair $ 147,600 Service department costs Repair Quality control Total 112, 200 48,300 140, 210 $ Repair 8 0.3 0 $ Proportion of Services Used by Quality Control Fabricating Required: Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round Intermediate calculations. Round your final answers to the nearest whole dollar amounts. 0.3 Cost Allocation To: Quality Control 0.5 8.2 Fabricating $ Finishing 0.2 0.5 0 $ Finishing
Fans Company has two service departments-product design and engineering support, and two production departments-assembly and finishing. The distribution of each service department's efforts to the other departments is shown below: SERVICE DEPARTMENT Product Design Engineering Support The direct operating costs of the departments (including both variable and fixed costs) were as follows: Product Design Engineering Support Assembly Finishing Multiple Choice $631,492 Design 0% 20% $1,018.633. SERVICES PROVIDED TO $ 162,000 $ 142,000 $ 552,000 $ 842,000 Support 10% 0% The total cost accumulated in the assembly department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar. Assume that the engineering support department goes first): Assembly 30% 45% Finishing. 60% 35%
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Blue Ridge Marketing Inc. manufactures two products, A and B. Presently, the company uses a single plantwide factory overhead rate for allocating overhead to products. However, management is considering moving to a multiple department rate system for allocating overhead. The following table presents information about estimated overhead and direct labor hours. Overhead DirectLabor Hours (dlh) Product A B Painting Dept. $459,138 11,800 dlh 16 dlh 2 dlh Finishing Dept. 56,203 4,900 6 20 Totals $515,341 16,700 dlh 22 dlh 22 dlh The overhead from both production departments allocated to each unit of Product B if Blue Ridge Marketing Inc. uses the multiple production department factory overhead rate method is
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Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Proportion of Services Used by Department Direct Costs Repair Quality Control Fabricating Finishing Fabricating $ 136,600 Finishing 102,200 Repair 43,800 0 0.2 0.6 0.2 Quality Control 81,800 0.8 0 0.1 0.1 Required: Use the step method to allocate the service costs, using the following: The order of allocation starts with Repair. The allocations are made in the reverse order (starting with Quality Control). Complete this question by entering your answers in the tabs below. Required A Required B Use the step method to allocate the service costs, using the following:The order of allocation starts with Repair.Note: Amounts to be deducted should be indicated by a…
Exercise 11-37 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-1, 2) Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Department Fabricating Finishing Repair Quality Control Direct Costs $ 135,600 100,200 42,900 80,100 Maximum Amount Proportion of Services Used by Quality Control Repair 0 0.3 0.3 0 Fabricating Finishing 0.6 0.1 0.1 0.6 Mack Precision Tool and Die estimates that the variable costs in the Repair Department total $15,225, and in Quality Control variable costs total $39,200. Avoidable fixed costs in the Repair Department are $12,400. Required: If Mack Precision Tool and Die outsources the Repair Department, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate…