Q₁ Raspberries R Us has two operating units (Jam and Jelly) and two support departments (HR and Accounting). The estimated operating costs and percentages of services used by these departments are as follows: HR Accounting Jam Jelly HR 0% 10% 60% 30% Accounting 10% 0% 40% 50% Operating Costs $9,000 13,500 40,000 35,000 Instructions a. Allocate the support department costs to the operating units using the direct method of allocating costs. b. Allocate the support department costs to the operating units using the step method of allocating costs. The departments are ranked based on the highest costs. c. Which of the two methods would you recommend for Raspberries R Us and why?

Q₁ Raspberries R Us has two operating units (Jam and Jelly) and two support departments (HR and Accounting). The estimated operating costs and percentages of services used by these departments are as follows: HR Accounting Jam Jelly HR 0% 10% 60% 30% Accounting 10% 0% 40% 50% Operating Costs $9,000 13,500 40,000 35,000 Instructions a. Allocate the support department costs to the operating units using the direct method of allocating costs. b. Allocate the support department costs to the operating units using the step method of allocating costs. The departments are ranked based on the highest costs. c. Which of the two methods would you recommend for Raspberries R Us and why?

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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Management and Allocation Assignm... i) Saved Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Proportion of Services Used by Direct Costs $120,000 76,000 54,000 37,000 Maintenance Machining Assembly Department Machining Assembly Maintenance Cafeteria Cafeteria 0.6 0.2 0.2 0.1 0.2 0.7 Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Maintenance. b. The allocations are made in the reverse order (starting with Cafeteria). Complete this question by entering your answers in the tabs below. Required A Required B The order of allocation starts with Maintenance. (Negative amounts should be indicated by a minus sign. Do not round Intermediate calculations.) To Cafeteria Machining Assembly From Maintenance…
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s Costing 1 Saved Help Save & Exit Yamane Corporation, a manufacturer, uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Administration and Facilities, and two operating departments, Assembly and Finishing. Data concerning those departments follow: Service Departments Facilities $ 67,900 Operating Departments Administration Assembly $ 109,260 23,000 Finishing $ 417,650 Departmental costs $ 27,000 3,740 17,000 5,000 1,660 Labor hours Space occupied 6,460 36, e00 9,000 Administration Department costs are allocated first on the basis of labor hours and Facilities Department costs are allocated second on the basis of space occupied. In the first step of the allocation, the amount of Administration Department cost allocated to the Assembly Department is closest to: Multiple Choice $14,180 $16,800 A a ENG hp
sequential method please Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Number of employees Square footage Human Resources General Factory Support Departments Human Resources $160,000 1,200 Direct costs Allocate: General Factory $330,000 General Factory Human Resources Total after allocation 40 Human Resources Producing Departments Fabricating Assembly The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: $114,400 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the sequential method. If an amount is zero, enter "0".…
Battery Small Motors Power 0.77 X 0.23 X General Factory 0.25 0.75 2. Allocate the support service costs to the operating divisions. Round all amounts to the nearest dollar. Use a minus sign to indicate a subtraction. For t boxes in which no entry is required, leave the box blank or enter zero ("0"). Direct costs Allocate: Support Departments Support Departments Operating Divisions Operating Divisions Power General Factory Battery Small Motors 220,000 ✔ 430,000 561,756 X $ 369,244 X Power 220,000 X General Factory 430,000 X Total 3. Assume divisional overhead rates are based on direct labor hours. Calculate the overhead rate for the Battery Division and for the Small Motors Division. Round yo answers to the nearest cent. Battery overhead rate Small Motors overhead rate 3.12 X 3.12 X
Service Emphasis The following analysis of selected data is for each of the two services Rockville Corporation provides. Service G Service H Per-unit data at 10,000 services Sales price Service costs: Variable Fixed Selling and administrative expenses: Variable Fixed $ Revenue Less: Variable cost Contribution margin Labor hours per unit Contribution margin per labor hour $ $36 $ 19 6 G 5 3 In the Rockville's operation, labor capacity is the company's constraining resource. Each unit of G requires 3 hours of labor, and each unit of H requires 1 hours of labor. Assuming that all service can be sold at a normal price, prepare an analysis showing which of the two services should be provided with any unused productive capacity that Rockville might have. Service $23 36 $ 25 X 11 * $ 3 3.67 × $ 15 4 2 1 H 23 19 x 4 x 1 4 × Any unused capacity should be devoted to Service H, which has $2 less contribution margin per labor hour than does Service G. Any unused capacity should be devoted to…
Required information SB (Static) The following information is... [The following information applies to the questions displayed below.] The following information is departmental cost allocation with two service departments and two production departments. Percentage Service Provided to Department Service 1 (S1) Service 2 (52) Production 1 (P1) Production 2 (P2) P1 P2 Cost $ 30,000 20,000 100,000 150,000 Total Cost Allocated S1 0% 20 P2 35% 20 60 Brief Exercise 7-14 (Static) If the cost in P1 is changed from... [LO 7-3] What is the amount of service department cost allocated to P1 and P2 using the direct method if the cost in P1 is changed from $100,000 to $120,000? 52 P1 30% 35% 0