Metro Corp allocates its IT department costs of $245,000 to its manufacturing and distribution departments using the direct method, based on number of employees. Information about departments: Department Employees IT 6 Manufacturing 45 Distribution 15 Required: Calculate how much of the IT department costs will be allocated to manufacturing.

Metro Corp allocates its IT department costs of $245,000 to its manufacturing and distribution departments using the direct method, based on number of employees. Information about departments: Department Employees IT 6 Manufacturing 45 Distribution 15 Required: Calculate how much of the IT department costs will be allocated to manufacturing.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...

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Hang 10 Manufacturers has two service departments, Factory Administration and Maintenance and two producing departments, A and B. Selected information relating to these departments are as follows: Service Departments Producing Departments Factory Administration Maintenance A B Number of employees 30 50 400 550 Total labour hours 4 000 6 000 80 000 120 000 Overhead costs R600 000 R500 000 R1 700 000 R2 400 000 Hang 10 Manufacturers allocates service department costs using the step method. Costs of Factory Administration are allocated on the basis of the number of employees. Costs of Maintenance are allocated on the basis of labour hours. Allocation begins with the Factory Administration Department.
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Employees Transactions Department direct costs Required A Administration 37,000 $363,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departments using the reciprocal method. Complete this question by entering your answers in the tabs below. Required B Required C From Accounting Domestic International 26 47 22,000 $141,000 $955,000 Department costs Administration allocation Accounting allocation Total cost Allocate the cost…
Snowflake Company has two service departments (S1 and S2) and two producing departments (P1 and P2). Department S1 costs are allocated on the basis of number of employees, and Department S2 costs are allocated on the basis of space occupied expressed in square feet. Data on direct department costs, number of employees, and space occupied are as follows: Direct dept. costs Number of employees Space occupied P1 P2 0 S1 S2 P1 $15,000 $22,000 $55,000 0 10 2,000 If Snowflake uses the direct method, what is the ratio representing the portion of Department S2 allocated to P2? 25 5 1,000 3,000 P2 $60,000 30 7,000
Thornton Corporation's computer services department assists two operating departments in using the company's information system effectively. The annual cost of computer services is $626,200. The production department employs 37 employees, and the sales department employs 25 employees. Thornton uses the number of employees as the cost driver for allocating the cost of computer services to operating departments. Required Allocate the cost of computer services to operating departments. Department Allocated Cost Production Sales
Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Costs Personnel Legal Complete this question by entering your answers in the tabs below. Total Personnel $ Personnel $ 10,800 $ 320,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method. 320,000 $ 320,000 $ Required A Required B Required C Allocate the cost of the service departments to the operating divisions using the reciprocal method. Note: Do not round intermediate calculations. Round your final answers…
Objective: Consider that you are an analyst at Regeneron Pharmaceuticals. You need to decide how to allocate administrative overhead costs to Regeneron's main commercial products (Eylea, Dupixent, Kevzara and Praluent). Determine how to appropriately allocate the costs in the table below to each of the commercial products using an allocation methodology of your choice. Department2019 Annual Operating ExpenseTime spent supporting Commercial productsCommercial$200MM100%IT$100MM25%Facilities$150MM0%Finance$25MM20%Human Resources$75MM10% Use the supporting document Net Product Sales of REGN Products to facilitate your analysis. Provide a written summary of how you allocated the overhead costs to each product in an outline of no more than one page. As a starting point, it's recommended that you revisit the material we covered in Chapter 12. Guidance on calculations:Start off with Net Product Sales of REGN Products. Your objective pertains to 2019 expenses, so you should be reviewing 2019…
Expo manufacturing has two production departments and two support departments. The number of employees for each department is as follows: $35,378 O $28,940 Human Resources Accounting Machining Producing Assembly Producing Human Resources shows a budget of $21,000 and accounting, $98,000, for the coming year. Support department costs are allocated on the basis of the number of employees. How much in total support costs would be allocated to assembly, using the step method? The Accounting department is allocated first. $119,000 $34,867 5 10 520 220
Koehl Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Wholesaling. Service Departments Operating Department Assembly wholesaling $ 185,580 Administrative Facilities $ 19,440 $ 71,340 $ 392,950 Departmental costs Employee hours Space occupied 2,000 1,000 14,000 2,000 4,000 22,000 2,000 39,000 Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied. The total Wholesaling Department cost after the allocations of service department costs is closest to: Multiple Choice $403.990 $396,430 $403,642 $402,601
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs From: Service department costs HR Total $ IT 0 20 $ 156,800 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. IT HR 1,585 0 $ 249,030 0 $ Publishing 2,536 30 $ 433,400 Cost Allocation To: HR 0 Publishing LA Binding 2,219 50 $ 398,500 0 $ Binding 0
Renata Company has four departments: Materials, Personnel, Manufacturing, and Packaging. Information follows. Department Square Feet Asset Values Employees Materials 40 60,000 $ 9,750 Personnel 8 7,500 1,300 Manufacturing Packaging 64 67,500 33,800 48 15,000 20,150 Total 160 150,000 $ 65,000 The four departments share the following indirect expenses for supervision, utilities, and insurance according to their allocation bases. Indirect Expense Supervision Utilities Insurance Total Cost $ 83,000 Number of employees Allocation Base 55,000 Square feet occupied 25,000 Asset values $ 163,000 Allocate each of the three indirect expenses to the four departments.
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs From: Service department costs IT HR Total IT $ 0 16 $ 152,000 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. HR 1,525 0 $ 247,950 152,000 Answer is not complete. Cost Allocation To: IT HR 152,000 $ 247,950 Publishing 2,440 24 $ 431,000 $ 247,950 Publishing $ Binding 2,135 40 $ 392,500 0 Binding 0
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