MalntenanceSecurityMiningCuttingDepartmentDepartmentDepartmentDepartmentMaintenance cost allocationSecurity cost allocationProduction activities total costs$43. Assume Jake's Gems is considering cutting costs by switching to a simpler support activity cost allocation method. Determine the total costs allocated fromeach support activity to the other activities.MIningCuttingParticularsDepartmentDepartmentMaintenance cost2$Security cost2$$4Production activities total cost%24$4Is it viable for the company to choose the direct method of cost allocation?Which of the following supports your answer?a. The direct cost allocation method is too simple and it is not accurate.b. The difference between the direct cost allocation method and the reciprocal method is minimal and the direct method is easier.c. The reciprocal method of cost allocation is more accurate and easier than the direct method.d. None of the above. Support activity cost allocationJake's Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These productionactivities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenancecosts are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Informationregarding the activities is provided in the following table:MalntenanceSecurityMiningCuttingNumber of service calls17206020Machine hours8988182176Asset value$200,000$80,000$300,000$300,000Department cost$25,000$42,500$160,0001. Is the process of allocating maintenance costs based on machine hours correct? Identify the measure than can possibly be used to allocate the$95,000maintenance costs.Measures that can possibly be used to allocate the maintenance costs.a. Number of service callsb. Asset valuec. Department costd. None of the above2. Based on your response to part (1), determine the total costs allocated from each support activity to the other activities using the reciprocal servicesmethod and the most appropriate cost driver for Maintenance.

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Department Department Department Department Maintenance cost allocation $4 Security cost allocation Production activities total costs 3. Assume Jake's Gems is considering cutting costs by switching to a simpler support activity cost allocation m each support activity to the other activities. Mining Cutting Department Department Particulars Maintenance cost $4 Security cost Production activities total cost s it viable for the company to choose the direct method of cost allocation?

Department Department Department Department Maintenance cost allocation $4 Security cost allocation Production activities total costs 3. Assume Jake's Gems is considering cutting costs by switching to a simpler support activity cost allocation m each support activity to the other activities. Mining Cutting Department Department Particulars Maintenance cost $4 Security cost Production activities total cost s it viable for the company to choose the direct method of cost allocation?

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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Simplifying the ABC System: Equally Accurate Reduced ABC Systems Selected activities and other information are provided for Patterson Company for its most recent year of operations. Expected Consumption Activity 7. Inserting dies 8. Purchasing materials 1. Developing test programs 3. Testing products ABC assignments Total overhead cost Required: Driver Number of dies Number of purchase orders Engineering hours Test hours Wafer A Wafer B Quantity 1,900,000 X والے 1,900 9,000 19,000 3. What if the two activities were 1 and 3? Repeat Requirements 1 and 2. Wafer A 0.7 0.2 Ratios 0.25 0.6 $165,000 1. Form reduced system cost pools for activities 7 and 8. Do not round interim calculations. Round your final answers to the nearest dollar. Inserting dies cost pool Purchasing cost pool Wafer B 0.3 2. As the costs of the reduced system cost pools to Wafer A and Wafer B. Do not round interim calculations. Round your final answers to the nearest dollar. 0.8 0.75 0.4 $165,000 $330,000
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Costs associated with two alternatives, code-named Q and R, being considered by Albiston Con Supplies costs Power costs Inspection costs Assembly costs a. Supplies costs a. Power costs Alternative Q Alternative R $ 67,000 $ 67,000 $ 31,000 $ 30,100 $ 30,100 $ 35,000 Required: a. Which costs are relevant and which are not relevant in the choice between these two alternat b. What is the differential cost between the two alternatives? a. Inspection costs a. Assembly costs b. Differential cost $ 21,000 $ 35,000 ६
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Part 1: Allocate the costs of the 3 service departments using the direct method. Part 2: Allocate the costs of the 3 service departments using the step method, with the order determined by the greater percentage usage. Part 3: Allocate the costs of the 3 service departments using the reciprical method. Part 4:What is one strength and one drawback of each of the methods?
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Q.1.2 The direct method as used by Ultimate Manufacturers is one method that can be used to re-assign service department cost. Discuss two other methods that can be used to re-assign service department overheads.
need answer for question 3 Q1&2 are correct 3. What if activities 1, 2, 5, and 8 each had a cost of $707,000 and the remaining activities had a cost of $24,000 each? Calculate the cost assigned to Wafer A by a fully specified ABC system and then by an approximately relevant ABC approach. Cost by a fully specified ABC system $ Cost by an approximately relevant ABC approach $