FUNDAMENTAL ACCT PRIN TEXT+CONNECT CODE
FUNDAMENTAL ACCT PRIN TEXT+CONNECT CODE
15th Edition
ISBN: 9781265564483
Author: Wild
Publisher: MCG
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Chapter 24, Problem 5QS

Basis for cost allocation

C1

For each of the following types of indirect and service department Expenses, identify one allocation basis that could be used to distribute it to the departments indicated.

______Computer service expenses of production scheduling for operating departments.

______General office department expenses of the operating departments.

______Maintenance department expenses of the operating departments.

______Electric utility expenses of all departments.

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In each blank next to the following types of indirect expenses and service department expenses, place the identifying letter of the best allocation basis to use to distribute it to the departments indicated.
Hh1. Account
The Bramble Company makes wheels and wings for ground transport vehicles and drones. In addition to the key manufacturing departments, Bramble needs two key support services, provided by its Maintenance and IT departments. The Maintenance costs are allocated to other departments based on the square footage of space each department occupies. The IT department allocates its costs to other departments based on the amount of time the IT employees spend assisting the other departments. The cost information of all four departments, along with their usage information for both allocation bases, is as follows. Initial cost Square feet occupied IT labor hours used Support Departments Maintenance IT $120.000 $74.000 1,100 1.800 1,100 Operating Departments Wheels $396,000 2,160 2,280 Wings $700,000 5,040 h 1.720 Totals $1,290,000 10,100 5,100

Chapter 24 Solutions

FUNDAMENTAL ACCT PRIN TEXT+CONNECT CODE

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