To determine Ascertain the cost allocated using each method of allocation. Explanation a) Direct method: Compute the base for allocation: Departmental Cost Allocation Bases Particulars Maintenance Utilities Production A Production B Maintenance 25% 25% 50% Utilities 15% 40% 45% Table (1) Compute the total costs allocated: Maintenance Production A Production B Service percentage 25% 50% Allocation percentage 33.33% 66.67% Allocation amount ($115,000) $38,330 $76,671 Utilities Particulars Production A Production B Service percentage 40% 45% Allocation percentage 47.06% 52.94% Allocation amount ($65,000) $30,589 $34,411 Particulars Production A Production B Maintenance $38,330 $76,671 Utilities $30,589 $34,411 Total Amount Allocated $68,919 $111,082 Table (2) b) Split-off method: Compute the base for allocation: Departmental Cost Allocation Bases Particulars Maintenance Utilities Production A Production B Maintenance 25% 25% 50% Utilities 15% 40% 45% Table (3) Compute the total costs allocated: Particulars Utilities Production A Production B Service percentage 25% 25% 50% Allocation amount ($115,000) $28,750 $28,750 $57,500 Utilities Particulars Production A Production B Service percentage 40% 45% Allocation percentage 47.06% 52...

Loose Leaf for Cost Management: A Strategic Emphasis

8th Edition

ISBN: 9781260165180

Author: BLOCHER, Edward; Stout, David F.; Juras, Paul; Cokins, Gary

Publisher: McGraw-Hill Education

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Concept explainers

Process Costing

Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.

Job Costing

Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing …

ABC Costing

Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In compari…

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Chapter 7, Problem 38P

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Ascertain the cost allocated using each method of allocation.

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Chapter 7, Problem 37P

Chapter 7, Problem 39P

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Chapter 7 Solutions

Loose Leaf for Cost Management: A Strategic Emphasis

Ch. 7 - Prob. 1Q Ch. 7 - Explain the difference between joint products and...Ch. 7 - Prob. 3Q Ch. 7 - What are the three methods of departmental cost...Ch. 7 - Prob. 5Q Ch. 7 - Prob. 6Q Ch. 7 - Prob. 7Q Ch. 7 - What are the limitations of joint product and...Ch. 7 - Prob. 9Q Ch. 7 - Prob. 10Q

Ch. 7 - What is the amount of service department cost...Ch. 7 - Prob. 12BE Ch. 7 - Prob. 13BE Ch. 7 - Prob. 14BE Ch. 7 - Prob. 15BE Ch. 7 - Prob. 16BE Ch. 7 - Prob. 17BE Ch. 7 - Prob. 18BE Ch. 7 - Prob. 19BE Ch. 7 - Brief Exercises 7-17 through 7-20 require the...Ch. 7 - Prob. 21E Ch. 7 - Prob. 22E Ch. 7 - Prob. 23E Ch. 7 - Prob. 24E Ch. 7 - Great Ape Glassworks manufactures glass used for...Ch. 7 - Cost allocation is often the centerpiece of...Ch. 7 - Prob. 27E Ch. 7 - Prob. 28E Ch. 7 - Robinson Products Company has two service...Ch. 7 - Donation of blood through the American Red Cross...Ch. 7 - Tango Company produces joint products M, N, and T...Ch. 7 - Arkansas Corporation manufactures liquid chemicals...Ch. 7 - Webster Company produces 25,000 units of product...Ch. 7 - Marin Company produces two software products...Ch. 7 - Logan Products has two production...Ch. 7 - McKeoun Enterprises is a large machine tool...Ch. 7 - Barfield Corporation prepares business plans and...Ch. 7 - Solexx Corporation allocates its service...Ch. 7 - Prob. 39P Ch. 7 - Prob. 40P Ch. 7 - Prob. 41P Ch. 7 - Prob. 42P Ch. 7 - Prob. 43P Ch. 7 - Prob. 44P Ch. 7 - Prob. 45P Ch. 7 - Prob. 46P Ch. 7 - Prob. 47P Ch. 7 - Prob. 48P Ch. 7 - Prob. 49P Ch. 7 - Prob. 50P

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Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY