River, Inc., has two producing departments. Each producing department is held responsible for a share of the costs of a support department. Actual and budgeted data are as follows: Current Year Support department hours used: Department X 10,000 Department Y 14,000 Total hours 24,000 Support department costs: Actual support department costs $72,000 Budgeted fixed service center costs $30,000 Budgeted variable rate per hour $4.00 Normal support department usage is 15,000 hours each for Department X and Department Y. Required: A. Assuming the purpose is product costing, allocate the costs of the support department using the direct method. B. Assuming the purpose is to evaluate performance, allocate the costs of the support department
River, Inc., has two producing departments. Each producing department is held responsible for a share of the costs of a support department. Actual and budgeted data are as follows: Current Year Support department hours used: Department X 10,000 Department Y 14,000 Total hours 24,000 Support department costs: Actual support department costs $72,000 Budgeted fixed service center costs $30,000 Budgeted variable rate per hour $4.00 Normal support department usage is 15,000 hours each for Department X and Department Y. Required: A. Assuming the purpose is product costing, allocate the costs of the support department using the direct method. B. Assuming the purpose is to evaluate performance, allocate the costs of the support department
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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River, Inc., has two producing departments. Each producing department is held responsible for a share of the costs of a support department.
Actual and budgeted data are as follows:
Actual and budgeted data are as follows:
Current Year |
|
Support department hours used: | |
Department X |
10,000 |
Department Y |
14,000 |
Total hours |
24,000 |
Support department costs: | |
Actual support department costs |
$72,000 |
Budgeted fixed service center costs |
$30,000 |
Budgeted variable rate per hour |
$4.00 |
Normal support department usage is 15,000 hours each for Department X and Department Y.
Required:
A. | Assuming the purpose is product costing, allocate the costs of the support department using the direct method. |
B. | Assuming the purpose is to evaluate performance, allocate the costs of the support department. |
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