Smith and Hawk Landscaping Company uses a centralized payroll department to support its 3 divisions. It incurs $48,000 year to run this department and allocates the cost of this department based upon the number of employees in each division. The detail is as follows: Division Number of Employees Residential Landscaping 85 Commercial Landscaping 120 Irrigation Services Total 45 250 How much of the $48,000 should be allocated to each division?

Smith and Hawk Landscaping Company uses a centralized payroll department to support its 3 divisions. It incurs $48,000 year to run this department and allocates the cost of this department based upon the number of employees in each division. The detail is as follows: Division Number of Employees Residential Landscaping 85 Commercial Landscaping 120 Irrigation Services Total 45 250 How much of the $48,000 should be allocated to each division?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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Service department charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of 64,560, and the Purchasing Department had expenses of 40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: A. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. B. Using the cost driver information in (A), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. C. Why does the Residential Division have a larger support department allocation than the other two divisions, even though its sales are lower?
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: Personnel Legal Eastern Western Employees - 40 120 40 Hours 10,800 - 5,400 1,800 Department direct costs $ 300,000 $ 160,000 $ 1,200,000 $ 790,000 Required: Allocate the cost of the service departments to the operating divisions using the direct method. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. Allocate the cost of the service departments to the operating divisions using the reciprocal method.
Required information [The following information applies to the questions displayed below.] The following information is departmental cost allocation with two service departments and two production departments. Department Service 1 (S1) Service 2 (S2) Production 1 (P1) Production 2 (P2) Cost $ 47,000 37,000 270,000 320,000 Percentage Service Provided to S1 0% 20 S2 P1 20% 40% 20 0 P2 40% 60 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 $270,000 to $290,000?
Express Delivery Company (EDC) is considering outsourcing its Payroll Department to a payroll processing company for an annual fee of $222,000. An internally prepared report summarizes the Payroll Department's annual operating costs as follows: Supplies Payroll clerks' salaries Payroll supervisor's salary Payroll employee training expenses Depreciation of equipment Allocated share of common building operating costs Allocated share of common administrative overhead Total annual operating cost $ 32,000 122,000 60,000 12,000 22,000 17,000 30,000 $ 295,000 EDC currently rents overflow office space for $38,000 per year. If the company closes its Payroll Department, the employees occupying the rented office space could be brought in-house and the lease agreement on the rented space could be terminated with no penalty. If the Payroll Department is outsourced the payroll clerks will not be retained; however, the supervisor would be transferred to the company's Human Resource Management…
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Required information [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) Cost $ 43,000 S1 S2 P1 P2 0% 30% 35% 35% Service 2 (S2) 33,000 25 0 45 30 Production 1 (P1) 230,000 Production 2 (P2) 280,000 What is the amount of service department cost allocated to P1 and P2 using the direct method? Total Cost P1 P2 Allocated
( perating income of the Pierce Automobile Division is $2,225,000. If operating income before support department allocations is $3,250,000, Oa. direct manufacturing charges are $1,025,000 Ob. noncontrollable charges are $1,025,000 Oc. operating expenses are $1,025,000 Od. total support department allocations are $1,025,000 All work saved. Next Submit Test for Gradin
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