Marin Company produces two software products (Cloud-X and Cloud-Y) in two separate departments (A and B). These products are highly regarded network maintenance programs. Cloud-X is used for small networks and Cloud-Y is used for large networks. Marin is known for the quality of its products and its ability to meet dates promised for software upgrades. Department A produces Cloud-X, and department B produces Cloud-Y. The production departments are supported by two support departments, systems design and programming services. The sources and uses of the support department time are summarized as follows: From To Total Labor Hours Design Programming Department A Department B Design - 5,000 1,000 9,000 15,000 Programming 400 - 600 1,000 2,000 The costs in the two service departments are as follows: Design Programming Labor and materials (all variable) $ 74,000 $ 50,400 Depreciation and other fixed costs 54,400 4,000 Total $ 128,400 $ 54,400 Required: 1. Determine the total support costs allocated to each of the producing departments using (a) the direct method, (b) the step method (design department goes first), and (c) the reciprocal method. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

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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Marin Company produces two software products (Cloud-X and Cloud-Y) in two separate departments (A and B). These products are highly regarded network maintenance programs. Cloud-X is used for small networks and Cloud-Y is used for large networks. Marin is known for the quality of its products and its ability to meet dates promised for software upgrades.

Department A produces Cloud-X, and department B produces Cloud-Y. The production departments are supported by two support departments, systems design and programming services. The sources and uses of the support department time are summarized as follows:

From	To	Total Labor Hours
Design	Programming	Department A	Department B
Design	-	5,000	1,000	9,000	15,000
Programming	400	-	600	1,000	2,000

The costs in the two service departments are as follows:

	Design	Programming
Labor and materials (all variable)	$ 74,000	$ 50,400
Depreciation and other fixed costs	54,400	4,000
Total	$ 128,400	$ 54,400

Required:

1. Determine the total support costs allocated to each of the producing departments using (a) the direct method, (b) the step method (design department goes first), and (c) the reciprocal method. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)