PR 6-1 (Algo) (LO 6.1, 6.2) Nicabrew has two production departments... Nicabrew has two production departments that each produce one beverage: pinolillo and cacao. The maintenance department is a support department that provides services to both production departments. Support department costs are allocated to Pinolillo and Cacao departments on the basis of support department hours. The maintenance department has fixed costs of $220,000. In addition, the maintenance department incurs a rate of $25 per hour in variable costs. Budgeted and actual maintenance department hours in each production department are as follows: Production Department Budgeted Hours Actual Hours Pinolillo Cacao Total Required: 2,500 1,500 3,000 1,600 4,000 4,600 Question a1. If a single-rate cost allocation method is used, what amount of maintenance cost will be budgeted for Pinolillo? a2. If a single-rate cost allocation method is used, what amount of maintenance cost will be budgeted for Cacao? b1. If a single-rate cost allocation method is used, what amount of maintenance cost will be allocated to Pinolillo based on actual usage? b2. If a single-rate cost allocation method is used, what amount of maintenance cost will be allocated to Cacao based on actual usage? c1. If a dual-rate cost allocation method is used, what amount of maintenance cost will be budgeted for Pinolillo? c2. If a dual-rate cost allocation method is used, what amount of maintenance cost will be budgeted for Cacao? d1. If a dual-rate cost allocation method is used, what amount of maintenance cost will be allocated to Pinolillo based on actual usage? d2. If a dual-rate cost allocation method is used, what amount of maintenance cost will be allocated to Cacao based on actual usage? Answer
PR 6-1 (Algo) (LO 6.1, 6.2) Nicabrew has two production departments... Nicabrew has two production departments that each produce one beverage: pinolillo and cacao. The maintenance department is a support department that provides services to both production departments. Support department costs are allocated to Pinolillo and Cacao departments on the basis of support department hours. The maintenance department has fixed costs of $220,000. In addition, the maintenance department incurs a rate of $25 per hour in variable costs. Budgeted and actual maintenance department hours in each production department are as follows: Production Department Budgeted Hours Actual Hours Pinolillo Cacao Total Required: 2,500 1,500 3,000 1,600 4,000 4,600 Question a1. If a single-rate cost allocation method is used, what amount of maintenance cost will be budgeted for Pinolillo? a2. If a single-rate cost allocation method is used, what amount of maintenance cost will be budgeted for Cacao? b1. If a single-rate cost allocation method is used, what amount of maintenance cost will be allocated to Pinolillo based on actual usage? b2. If a single-rate cost allocation method is used, what amount of maintenance cost will be allocated to Cacao based on actual usage? c1. If a dual-rate cost allocation method is used, what amount of maintenance cost will be budgeted for Pinolillo? c2. If a dual-rate cost allocation method is used, what amount of maintenance cost will be budgeted for Cacao? d1. If a dual-rate cost allocation method is used, what amount of maintenance cost will be allocated to Pinolillo based on actual usage? d2. If a dual-rate cost allocation method is used, what amount of maintenance cost will be allocated to Cacao based on actual usage? Answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:PR 6-1 (Algo) (LO 6.1, 6.2) Nicabrew has two production departments...
Nicabrew has two production departments that each produce one beverage: pinolillo and cacao. The maintenance department is a
support department that provides services to both production departments. Support department costs are allocated to Pinolillo and
Cacao departments on the basis of support department hours. The maintenance department has fixed costs of $220,000. In addition,
the maintenance department incurs a rate of $25 per hour in variable costs. Budgeted and actual maintenance department hours in
each production department are as follows:
Production Department Budgeted Hours Actual Hours
Pinolillo
Cacao
Total
Required:
2,500
1,500
3,000
1,600
4,000
4,600
Question
a1. If a single-rate cost allocation method is used, what amount of maintenance cost will be
budgeted for Pinolillo?
a2. If a single-rate cost allocation method is used, what amount of maintenance cost will be
budgeted for Cacao?
b1. If a single-rate cost allocation method is used, what amount of maintenance cost will be
allocated to Pinolillo based on actual usage?
b2. If a single-rate cost allocation method is used, what amount of maintenance cost will be
allocated to Cacao based on actual usage?
c1. If a dual-rate cost allocation method is used, what amount of maintenance cost will be
budgeted for Pinolillo?
c2. If a dual-rate cost allocation method is used, what amount of maintenance cost will be
budgeted for Cacao?
d1. If a dual-rate cost allocation method is used, what amount of maintenance cost will be
allocated to Pinolillo based on actual usage?
d2. If a dual-rate cost allocation method is used, what amount of maintenance cost will be
allocated to Cacao based on actual usage?
Answer
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Step 1: Define the cost allocation.
VIEWStep 2: a. Determine the budgeted costs allocated under single rate method for P and C Departments.
VIEWStep 3: b. Compute the actual costs allocated under single rate method.
VIEWStep 4: c. Determine the budgeted costs allocated using the dual-rate method.
VIEWStep 5: d. Compute the actual costs under dual-rate method.
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