1.
Introduction:
Step-down method: The
Allocation of the service department’s cost to the consuming department and the predetermined overhead rates in the operating department
2.
Introduction:
Direct method: Under the direct method, the overhead costs incurred by the supporting department are directly allocated to the operating department.
Allocation of the service department’s cost to the consuming department using the direct method and the predetermined overhead rate.
3.
a.
Step-down method: The overhead costs of supporting incurred by the supporting department are allocated to other supporting departments and also the operating department based on the allocation base.
The amount of overhead cost for the job using overhead rates computed in parts 1 and 2.
3.
b.
Step-down method: The overhead costs of supporting incurred by the supporting department are allocated to other supporting departments and also the operating department based on the allocation base.
The reason the step-down method is a better base for computing the predetermined rates than the direct method.
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Chapter IE Solutions
MANAGERIAL ACCT-CONNECT W/PROCTORIO.ONLY
- A company purchased for cash a machine with a list price of $85,000. The machine was shipped FOB shipping point at a cost of $6,500. Installation and test runs of the machine cost $4,500. The recorded acquisition cost of the machine is which amount? a. $96,000 b. $126,000 c. $85,000 d. $92,000arrow_forwardBaxter Industries reported the following financial data for one of its divisions for the year: • Average invested assets = $600,000 • Sales = $1,200,000 Income = $140,000 What is the investment turnover? a) 2.75 b) 3.40 c) 2.00 d) 4.25 e) 5.00arrow_forwardChapter: Work in process - Vicky Company has beginning work in process inventory of $216,000 and total manufacturing costs of $954,000. If cost of goods manufactured is $980,000, what is the cost of the ending work in process inventory? Don't want wrong answerarrow_forward
- A company bought a new cooling system for $150,000 and was given a trade-in of $95,000 on an old cooling system, so the company paid $55,000 cash with the trade-in. The old system had an original cost of $140,000 and accumulated depreciation of $60,000. If the transaction has commercial substance, the company should record the new cooling system at _. Solvearrow_forwardFinancial accountingarrow_forwardCorrect Answerarrow_forward
- Harry Company sells 30,000 units at $25 per unit. Variable costs are $20.50 per unit, and fixed costs are $52,000. Determine the following: a. The contribution margin ratio b. The unit contribution margin c. The income from operationsarrow_forwardCorrect answerarrow_forwardA company sold a piece of equipment that originally cost $55,000 for $20,000 when accumulated depreciation on the equipment was $40,000. What is the amount of gain or loss recorded on the sale of this equipment?arrow_forward
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