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This problem illustrates how costs of two corporate support departments are allocated tooperating divisions using the dual-rate method. Fixed costs are allocated using budgetedcosts and budgeted hours used by other departments. Variable costs are allocated usingactual costs and actual hours used by other departments.Computer Horizons budgets the following amounts for its two central corporate support departments (legal and personnel) in supporting each other and the two manufacturing divisions, the laptop division (LTD) and the work station division (WSD): A B C D F G E OPERATING 1 SUPPORT Legal Personnel 2 Department Department LTD Total 3 BUDGETED USAGE 4 Legal (hours) 250 - 1,500 2,500 5 10% 60% 100% (Percentages) Personnel (hours) 6 2,500 22,500 50,000 7 (Percentages) 5% 45% 100% 8 9 ACTUAL USAGE 10 Legal (hours) 400 400 2,000 11 (Percentages) 20% 20% 100% 12 Personnel (hours) 26,600 40,000 2,000 5% 13 (Percentages) 66.50% 100% 14 Budgeted fixed overhead costs before any 15 interdepartment cost allocations $360,000 $475,000 - $835,000 16 Actual variable overhead costs before any 17 interdepartment cost allocations $200,000 $600,000 $800,000 Instructions What amount of support-department costs for legal and personnel will be allocated toLTD and WSD using (a) the direct method, (b) the step-down method (allocating the legaldepartment costs first), and (c) the reciprocal method using linear equations? WSD 750 30% 25,000 50% 1,200 60% 11,400 28.5%

This problem illustrates how costs of two corporate support departments are allocated tooperating divisions using the dual-rate method. Fixed costs are allocated using budgetedcosts and budgeted hours used by other departments. Variable costs are allocated usingactual costs and actual hours used by other departments.Computer Horizons budgets the following amounts for its two central corporate support departments (legal and personnel) in supporting each other and the two manufacturing divisions, the laptop division (LTD) and the work station division (WSD): A B C D F G E OPERATING 1 SUPPORT Legal Personnel 2 Department Department LTD Total 3 BUDGETED USAGE 4 Legal (hours) 250 - 1,500 2,500 5 10% 60% 100% (Percentages) Personnel (hours) 6 2,500 22,500 50,000 7 (Percentages) 5% 45% 100% 8 9 ACTUAL USAGE 10 Legal (hours) 400 400 2,000 11 (Percentages) 20% 20% 100% 12 Personnel (hours) 26,600 40,000 2,000 5% 13 (Percentages) 66.50% 100% 14 Budgeted fixed overhead costs before any 15 interdepartment cost allocations $360,000 $475,000 - $835,000 16 Actual variable overhead costs before any 17 interdepartment cost allocations $200,000 $600,000 $800,000 Instructions What amount of support-department costs for legal and personnel will be allocated toLTD and WSD using (a) the direct method, (b) the step-down method (allocating the legaldepartment costs first), and (c) the reciprocal method using linear equations? WSD 750 30% 25,000 50% 1,200 60% 11,400 28.5%

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 3DQ
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Q4. (Horngren) This problem illustrates how costs of two corporate support departments are allocated tooperating divisions using the dual-rate method. Fixed costs are allocated using budgetedcosts and budgeted hours used by other departments. Variable costs are allocated usingactual costs and actual hours used by other departments.Computer Horizons budgets the following amounts for its two central corporate support departments (legal and personnel) in supporting each other and the two manufacturing divisions, the laptop division (LTD) and the work station division (WSD): A B D E F G 1 SUPPORT OPERATING Personnel Legal Department Department 2 Total 3 BUDGETED USAGE 4 Legal (hours) - 250 2,500 5 10% 100% (Percentages) Personnel (hours) 6 2,500 50,000 7 (Percentages) 5% 100% 8 9 ACTUAL USAGE 10 Legal (hours) 400 2,000 11 (Percentages) 20% 100% 12 Personnel (hours) 40,000 2,000 5% 13 (Percentages) 100% 14 Budgeted fixed overhead costs before any 15 interdepartment cost allocations $360,000 $475,000 $835,000 16 Actual variable overhead costs before any 17 interdepartment cost allocations $200,000 $600,000 $800,000 Instructions What amount of support-department costs for legal and personnel will be allocated toLTD and WSD using (a) the direct method, (b) the step-down method (allocating the legaldepartment costs first), and (c) the reciprocal method using linear equations? LTD 1,500 60% 22,500 45% 400 20% 26,600 66.50% WSD 750 30% 25,000 50% 1,200 60% 11,400 28.5% -
Transcribed Image Text:Q4. (Horngren) This problem illustrates how costs of two corporate support departments are allocated tooperating divisions using the dual-rate method. Fixed costs are allocated using budgetedcosts and budgeted hours used by other departments. Variable costs are allocated usingactual costs and actual hours used by other departments.Computer Horizons budgets the following amounts for its two central corporate support departments (legal and personnel) in supporting each other and the two manufacturing divisions, the laptop division (LTD) and the work station division (WSD): A B D E F G 1 SUPPORT OPERATING Personnel Legal Department Department 2 Total 3 BUDGETED USAGE 4 Legal (hours) - 250 2,500 5 10% 100% (Percentages) Personnel (hours) 6 2,500 50,000 7 (Percentages) 5% 100% 8 9 ACTUAL USAGE 10 Legal (hours) 400 2,000 11 (Percentages) 20% 100% 12 Personnel (hours) 40,000 2,000 5% 13 (Percentages) 100% 14 Budgeted fixed overhead costs before any 15 interdepartment cost allocations $360,000 $475,000 $835,000 16 Actual variable overhead costs before any 17 interdepartment cost allocations $200,000 $600,000 $800,000 Instructions What amount of support-department costs for legal and personnel will be allocated toLTD and WSD using (a) the direct method, (b) the step-down method (allocating the legaldepartment costs first), and (c) the reciprocal method using linear equations? LTD 1,500 60% 22,500 45% 400 20% 26,600 66.50% WSD 750 30% 25,000 50% 1,200 60% 11,400 28.5% -
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