MANAGERIAL ACCT(LL)+CONNECT+PROCTORIO PL
17th Edition
ISBN: 9781265574826
Author: Garrison
Publisher: MCG
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Chapter IE, Problem 12IE
1.
To determine
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.
To determine
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.
To determine
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.
To determine
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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Comprehensive support department allocations
Management at C. Pier Press has decided to allocate costs of the paper’s two support departments (administration and human resources) to the two revenue-generating departments (advertising and circulation). Administration costs are to be allocated on the basis of dollars of assets employed; human resources costs are to be allocated on the basis of number of employees. The following costs and allocation bases are available:
Department
Direct Costs
Number of Employees
Assets Employed
Administration
$390,750
5
$193,550
Human resources
246,350
4
145,850
Advertising
478,900
6
381,200
Circulation
676,300
13
935,150
Totals
$1,792,300
28
$1,655,750
a. Using the direct method, allocate the support department costs to the revenue-generating departments.Note: Round percentages in your calculation to the nearest whole percent (for example, round 34.5% to 35%).Note: Round your final answer to the nearest whole dollar.Total…
Question V – Allocate Costs with Reciprocal Method (8 Marks)
Anchor Company manufactures a variety of tool boxes. They have two operating divisions – Corporate Sales and Consumer Sales – and two support divisions –Admin and IT. Each operating division operates independently. Anchor uses the number of employees to allocate Admin costs and computer processing time to allocate IT costs. The following data are available for the month:
SUPPORT DEPT
OPERATING DEPT
Admin
IT
Corp Sales
Cons. Sales
Budgeted costs before interdivision allocations
$170,000
$400,000
$2,000,000
$1,000,000
Admin budgeted # of employees
40
80
70
IT budgeted # of processing time
(in minutes)
600
4,000
3,400
REQUIRED:
Using the reciprocal method, allocate the support department costs.
Chapter IE Solutions
MANAGERIAL ACCT(LL)+CONNECT+PROCTORIO PL
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- Support Department Cost Allocation—Reciprocal Services Method Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $242,000. The total cost of the Cafeteria Department is $490,000. The number of employees and the square footage in each department are as follows: Employees Square Feet Security Department 10 520 Cafeteria Department 28 2,400 Laser Department 40 3,200 Forming Department 50 2,400 Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and…arrow_forwardSupport department cost allocation-reciprocal services method Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows: Support Department Janitorial Department Cafeteria Department Cost Driver Square footage to be serviced Number of employees Janitorial Department $310,000 Janitorial Department cost allocation Cafeteria Department cost allocation Cafeteria Department $169,000 5,000 3 Assembly Department Department costs $680,000 Square feet 4,000 10 Number of employees Allocate the support department costs to the production departments using the reciprocal services method. 50 10 Cutting Department $1,504,000 1,000 30 Cutting Department Assembly Departmentarrow_forwardDomesticarrow_forward
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