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Temple Lights, Inc. produces Hanukkah menorahs in its Cutting and Molding departments. The Maintenance and Security departments support the production of the menorahs. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Machine hours Asset value Maintenance Department 800 $2,000 $42,480 Security Department Production departments' total costs Cutting Department Cutting Department 2,000 $1,470 Department cost $18,880 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. 7,600 $1,500 $61,000 Molding Department Molding Department 10,400 $6,500 $84,000

Temple Lights, Inc. produces Hanukkah menorahs in its Cutting and Molding departments. The Maintenance and Security departments support the production of the menorahs. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Machine hours Asset value Maintenance Department 800 $2,000 $42,480 Security Department Production departments' total costs Cutting Department Cutting Department 2,000 $1,470 Department cost $18,880 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. 7,600 $1,500 $61,000 Molding Department Molding Department 10,400 $6,500 $84,000

FINANCIAL ACCOUNTING
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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Support department cost allocation-reciprocal services method Temple Lights, Inc. produces Hanukkah menorahs in its Cutting and Molding departments. The Maintenance and Security departments support the production of the menorahs. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Machine hours Asset value Maintenance Department 800 $2,000 $42,480 Security Department Production departments' total costs 2,000 7,600 10,400 $1,470 $1,500 $6,500 Department cost $18,880 $61,000 $84,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Department Cutting Department Molding Department $ Molding Department
Transcribed Image Text:Support department cost allocation-reciprocal services method Temple Lights, Inc. produces Hanukkah menorahs in its Cutting and Molding departments. The Maintenance and Security departments support the production of the menorahs. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Machine hours Asset value Maintenance Department 800 $2,000 $42,480 Security Department Production departments' total costs 2,000 7,600 10,400 $1,470 $1,500 $6,500 Department cost $18,880 $61,000 $84,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Department Cutting Department Molding Department $ Molding Department
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