Madison Park Co-op, a whole foods grocery and gift shop, has provided the following data to be used in its service department cost allocations: Departmental costs before allocations Employee-hours Space occupied-square feet Required: Service Departments Administration Janitorial $ 200,000 $ 60,000 470 800 340 1,100 Operating Departments Groceries Gifts $ 3,820,000 2,680 $ 350,000 180 9,400 600 Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the basis of employee-hours and then Janitorial on the basis of space occupied. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Departmental costs before allocations Allocations $ Service Departments Administration Janitorial 200,000 $ 60,000 Operating Departments Groceries $3,820,000 $ Total Gifts 350,000 $4,430,000 Administration costs (200,000) Janitorial costs Total costs after allocations $ 0 $ 60,000 $3,820,000 $ 350,000 $4,230,000

Madison Park Co-op, a whole foods grocery and gift shop, has provided the following data to be used in its service department cost allocations: Departmental costs before allocations Employee-hours Space occupied-square feet Required: Service Departments Administration Janitorial $ 200,000 $ 60,000 470 800 340 1,100 Operating Departments Groceries Gifts $ 3,820,000 2,680 $ 350,000 180 9,400 600 Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the basis of employee-hours and then Janitorial on the basis of space occupied. (Please enter allocations from a department as negative and allocations to a department as positive. The line should add across to zero. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Departmental costs before allocations Allocations $ Service Departments Administration Janitorial 200,000 $ 60,000 Operating Departments Groceries $3,820,000 $ Total Gifts 350,000 $4,430,000 Administration costs (200,000) Janitorial costs Total costs after allocations $ 0 $ 60,000 $3,820,000 $ 350,000 $4,230,000

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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Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, and distributing. The firm reports the following operating data for the year just completed: Activity Purchasing Warehousing Distributing Cost Driver Number of purchase orders Number of moves Number of shipments. Quantity of Cost Driver 1,040 8,400 540 Maximum cost Cost per Unit of Cost Driver $154 per order 34 per move 84 per shipment Caldwell buys 100,400 units at an average unit cost of $14 and sells them at an average unit price of $24. The firm also has fixed operating costs of $250,400 for the year. Caldwell's customers are demanding a 14% discount for the coming year. The company expects to sell the same amount if the demand for price reduction can be met. Caldwell's suppliers, however, are willing to give only a 8% discount. Required: Caldwell has estimated that it can reduce the number of purchase orders to 720 and can decrease the cost of each shipment by…
Optimal Health is an outpatient surgical clinic. The clinic's three activities, their overhead cost, and their cost drivers follow. Budgeted Activity Activity Supplies Patient services Activity Cost Driver Surgical hours (SH) Number of patients Square feet Building cost The two main surgical units and their actual activity usage follow. Actual Activity Usage Budgeted Cost $ 2,310,000 39,000 294,000 Service General surgery Orthopedic surgery Surgical Hours 2,600 8,400 Patients 300 200 Square Feet 720 1,380 Usage 11,000 500 2,100 Required: 1. Compute activity rates using activity-based costing. 2. Allocate overhead cost to the general surgery and to the orthopedic surgery units. Compute overhead cost per patient for each surgery unit.
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Kolinski Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Telecommunications and Administration, and two operating departments, Surgery and Recovery. Departmental costs Telecommunications ports Employees Multiple Choice O$317.118 $314,853 $310,244 Service Departments Tele communications $ 26,344 $305,921 31 30 Telecommunications Department costs are allocated on the basis of the number of telecommunications ports in departments and Administration Department costs are allocated on the basis of employees. The total Surgery Department cost after service department allocations is closest to: Administration $ 27,472 14 11 Operating Department Surgery Recovery $ 282,750 $ 599,690 40 74 34 27
Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to dozens of hospitals. In the face of declining profits, Med Max decided to implement an activity-based costing system to improve its understanding of the costs incurred to serve each hospital. The company broke its selling and administrative expenses into four activities as shown below: Activity Cost Pool Customer deliveries Manual order processing Electronic order processing Line item picking Total selling and administrative expenses Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Total Activity 4,700 deliveries 3,700 orders Total Cost $ 361,900 266,400 191,540 518,000 370,000 line items $ 1,337,840 12,200 orders Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: Activity Measure Number of deliveries Number of manual orders Number of electronic…
Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to dozens of hospitals. In the face of declining profits, Med Max decided to implement an activity-based costing system to improve its understanding of the costs incurred to serve each hospital. The company broke its selling and administrative expenses into four activities as shown below: Activity Cost Pool Customer deliveries Total Cost $ 313,900 224,400 180,540 Manual order processing Electronic order processing Line item picking 379,500 Total selling and administrative expenses $ 1,098,340 Med Max gathered the data below for two of the many hospitals that it serves-City General and County General: Activity Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items picked Required 1 City General 20 0 20 120 Required 2 Activity Measure Number of deliveries Number of manual orders Number of electronic orders Number of line items…
Boston Home Center (BHC) offers customers the use of a truck at $64 per trip to take purchased merchandise home. BHC reports the following information about the trucks it has for customer usage: Cost Driver Rate Cost Driver Volume Resources used Operation $ 0.55 per mile 46,200 miles Administration 25.00 per trip 1,874 trips Resources supplied Operation $ 35,400 Administration $ 62,400 Sales revenue totaled $80,000. Required: Prepare a traditional income statement. Prepare an activity-based income statement. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a traditional income statement. Traditional Income Statement Sales revenue Operation costs Administration costs Operating profit Activity-Based Income Statement Resources Used Unused Resource Capacity…
Support department cost allocation-direct method Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant detail Support Department Cost Driver Square footage to be serviced Janitorial Department Cafeteria Department Number of employees Janitorial Department $310,000 Cafeteria Department $169,000 5,000 3 Janitorial Department cost allocation. Cafeteria Department cost allocation Cutting Department $1,504,000 Department costs Square feet 50 1,000 Number of employees 10 30 Allocate the support department costs to the production departments using the direct method. Cutting Department Assembly Department $580,000 4,000 10 Assembly Department
Crane, Inc. uses activity-based costing as the basis for information to set prices for its six lines of seasonal coats. Activity Cost Pools Sizing and cutting Stitching and trimming Wrapping and packing Sizing and cutting Stitching and trimming Estimated Overhead Wrapping and packing $4,108,500 1,439,100 $ Compute the activity-based overhead rates using the following budgeted data for each of the activity cost pools. (Round answers to 2 decimal places, e.g. 12.25.) $ LA 325,500 $ Estimated Use of Cost Drivers per Activity 166,000 machine hours 78,000 labor hours 35,000 finished units Activity-based overhead rates per machine hour per labor hour per finished unit
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ACC5200/Summer21/Chapter 7: Homework Problems 1. Customer profitability analysis Worley Company buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals. Worley sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 8%. For example, if a hospital buys supplies from Worley that had cost Worley $100 to buy from manufacturers, Worley would charge the hospital $108 to purchase these supplies. For years, Worley believed that the 8% markup covered its selling and administrative expenses and provided a reasonable profit. However, in the face of declining profits Worley decided to implement an activity-based costing system to help improve its understanding of customer profitability. The company broke its selling and administrative expenses into five activities as shown below: Total Activity 4,000 deliveries Total Cost Activity Cost Pool (Activity Measure) Customer deliveries (Number of…