Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Supplying Department Engineering Administration Maintenance Direct cost Engineering Administration Maintenance Engineering 0 10% 0 $28,000 Total Costs Using Department Administration Maintenance Fabrication $ 55,760 50% 0 20% $217,600 $ Allocated to: Fabrication Required: Allocate the service department costs to the two operating departments using the reciprocal method. (Do not round intermediate calculations.) 0 20% 0 $25,000 Assembly 0 $ 10% 50% 20% 0 $195,000 Assembly 40% 20% 60% $50,000
Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Supplying Department Engineering Administration Maintenance Direct cost Engineering Administration Maintenance Engineering 0 10% 0 $28,000 Total Costs Using Department Administration Maintenance Fabrication $ 55,760 50% 0 20% $217,600 $ Allocated to: Fabrication Required: Allocate the service department costs to the two operating departments using the reciprocal method. (Do not round intermediate calculations.) 0 20% 0 $25,000 Assembly 0 $ 10% 50% 20% 0 $195,000 Assembly 40% 20% 60% $50,000
Chapter1: Financial Statements And Business Decisions
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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![Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering,
Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded.
Supplying
Department
Engineering
Administration
Maintenance
Direct cost
Using Department
Engineering Administration Maintenance Fabrication
50%
-3733]
0
20%
$25,000
Engineering
Administration
Maintenance
Total
0
10%
0
$28,000
Costs
$ 55,760
$217,600
Allocated to:
Fabrication
$
Assembly
0 $
0
20%
0
0
10%
Required:
Allocate the service department costs to the two operating departments using the reciprocal method. (Do not round intermediate
calculations.)
50%
20%
$195,000
Assembly
40%
20%
60%
$50,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe2de78cf-cc0b-4732-97f1-d9204d2d7c31%2F43ab048e-0731-4f86-a21d-d90b6d626c17%2Ffl47ntm_processed.png&w=3840&q=75)
Transcribed Image Text:Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering,
Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded.
Supplying
Department
Engineering
Administration
Maintenance
Direct cost
Using Department
Engineering Administration Maintenance Fabrication
50%
-3733]
0
20%
$25,000
Engineering
Administration
Maintenance
Total
0
10%
0
$28,000
Costs
$ 55,760
$217,600
Allocated to:
Fabrication
$
Assembly
0 $
0
20%
0
0
10%
Required:
Allocate the service department costs to the two operating departments using the reciprocal method. (Do not round intermediate
calculations.)
50%
20%
$195,000
Assembly
40%
20%
60%
$50,000
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