Togan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Sourcing Sourcing Operations 10,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Finishing Total Total Labor Hours Used by Departments Operations 20,000 Assembly 40,000 60,000 a. Direct Method Assembly Finishing b. Step Method Assembly Finishing c Reciprocal Method Assembly Departmental Costs $ 174,000 220,000 416,000 261,000 $1,071,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Total Service Department Cost Allocated Finishing 60,000 50,000 Total Production Cost
Togan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Sourcing Sourcing Operations 10,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Finishing Total Total Labor Hours Used by Departments Operations 20,000 Assembly 40,000 60,000 a. Direct Method Assembly Finishing b. Step Method Assembly Finishing c Reciprocal Method Assembly Departmental Costs $ 174,000 220,000 416,000 261,000 $1,071,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Total Service Department Cost Allocated Finishing 60,000 50,000 Total Production Cost
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 8E
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![Togan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing
(purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has
the following labor hours devoted by each of the service departments to the other departments.
Sourcing
Operations
Sourcing
10,000
The costs incurred in the plant are as follows:
Departments
Sourcing
Operations
Assembly
Finishing
Total
Total Labor Hours Used by Departments
Assembly
40,000
60,000
a. Direct Method
Assembly
Finishing
b. Step Method
Assembly
Finishing
c Reciprocal Method
Assembly
Operations
20,000
Departmental
Costs
$ 174,000
220,000
416,000
261,000
$1,071,000
Required:
1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing
department that provides the greatest percentage of services to other service departmerits goes first, and (c) the reciprocal method?
2. What are the total costs in the production departments after allocation?
(For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
Total Service
Department Cost
Allocated
Finishing
60,000
50,000
Total Production
Cost](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F21da24e6-53ba-4ff6-9652-e66c5b6a75ec%2F3eeadd0f-e96c-4352-a1d0-653de116df6b%2Fyxaz1vg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Togan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing
(purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has
the following labor hours devoted by each of the service departments to the other departments.
Sourcing
Operations
Sourcing
10,000
The costs incurred in the plant are as follows:
Departments
Sourcing
Operations
Assembly
Finishing
Total
Total Labor Hours Used by Departments
Assembly
40,000
60,000
a. Direct Method
Assembly
Finishing
b. Step Method
Assembly
Finishing
c Reciprocal Method
Assembly
Operations
20,000
Departmental
Costs
$ 174,000
220,000
416,000
261,000
$1,071,000
Required:
1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing
department that provides the greatest percentage of services to other service departmerits goes first, and (c) the reciprocal method?
2. What are the total costs in the production departments after allocation?
(For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
Total Service
Department Cost
Allocated
Finishing
60,000
50,000
Total Production
Cost
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