Exercise 11-31 (Algo) Cost Allocation: Reciprocal Method, Two Service Departments (LO 11-1) Activity and selected costs for three production departments (Training. Independent, and Commercial) and two service departments (Accounting and Facilities) at DuBay Films for the past month follow Supplying Department Accounting Facilities Direct cost From: Service department costs Accounting Facilities Total allocations Accounting Direct costs Total costs 0.20 $ 190,000 Accounting Required: Allocate service department costs to Training, Independent, and Commercial using the reciprocal method. What are the total costs of Training, Independent, and Commercial after this allocation? Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts. S Facilities 0.40 $ 184,500 S OS Using Department Training 0$ 0.30 0.20 $ 330,000 Facilities Independent 0.20 0.20 $ 201,000 Cost Allocation To: Training 0 $ 0 $ Commercial 0.10 0.40 $ 287,000 Independent 0 $ 0 $ 0$ 0 $ Commercial

Exercise 11-31 (Algo) Cost Allocation: Reciprocal Method, Two Service Departments (LO 11-1) Activity and selected costs for three production departments (Training. Independent, and Commercial) and two service departments (Accounting and Facilities) at DuBay Films for the past month follow Supplying Department Accounting Facilities Direct cost From: Service department costs Accounting Facilities Total allocations Accounting Direct costs Total costs 0.20 $ 190,000 Accounting Required: Allocate service department costs to Training, Independent, and Commercial using the reciprocal method. What are the total costs of Training, Independent, and Commercial after this allocation? Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts. S Facilities 0.40 $ 184,500 S OS Using Department Training 0$ 0.30 0.20 $ 330,000 Facilities Independent 0.20 0.20 $ 201,000 Cost Allocation To: Training 0 $ 0 $ Commercial 0.10 0.40 $ 287,000 Independent 0 $ 0 $ 0$ 0 $ Commercial

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 10E: Support department cost allocation comparison Refer to your answers to Exercises 7-9. Compare the...

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Exercise 11-37 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-1, 2) Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Department Fabricating Finishing Repair Quality Control Direct Costs $ 135,600 100,200 42,900 80,100 Maximum Amount Proportion of Services Used by Quality Control Repair 0 0.3 0.3 0 Fabricating Finishing 0.6 0.1 0.1 0.6 Mack Precision Tool and Die estimates that the variable costs in the Repair Department total $15,225, and in Quality Control variable costs total $39,200. Avoidable fixed costs in the Repair Department are $12,400. Required: If Mack Precision Tool and Die outsources the Repair Department, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate…
Exercise 11-31 (Algo) Cost Allocation: Reciprocal Method, Two Service Departments (LO 11-1) Activity and selected costs for three production departments (Training, Independent, and Commercial) and two service departments (Accounting and Facilities) at DuBay Films for the past month follow: Supplying Department Accounting Facilities Direct cost From: Service department costs Accounting Facilities Total allocations Direct costs Total costs Accounting $ 0 0.20 $ 250,000 Required: Allocate service department costs to Training, Independent, and Commercial using the reciprocal method. What are the total costs of Training, Independent, and Commercial after this allocation? Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts. Accounting $ 0 $ Facilities 0.40 0 $ 214,500 0 $ Using Department Training 0.30 0.20 $ 390,000 Facilities 0 Cost Allocation To: Training $ 0 $ Independent…
Exercise 11-31 (Algo) Cost Allocation: Reciprocal Method, Two Service Departments (LO 11-1) Activity and selected costs for three production departments (Training. Independent, and Commercial) and two service departments (Accounting and Facilities) at DuBay Films for the past month follow: Supplying Department Accounting Facilities Direct cost From: Service department costs Accounting Facilities Total allocations Accounting 8 0.20 $ 190,000 Direct costs Total costs Facilities 0.40 $ 184,500 Required: Allocate service department costs to Training, Independent, and Commercial using the reciprocal method. What are the total costs of Training, Independent, and Commercial after this allocation? Note: Amounts to be deducted should be indicated by a minus sign. Do not round Intermediate calculations. Round your final answers to the nearest whole dollar amounts. Accounting Using Department Training 0.30 0.20 $ 330,000 Facilities Independent 0.20 0.20 $ 201,000 Cost Allocation To: Training…
Problem 11-66 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-4, 5) Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Using Department Supplying Department Processing Administration Maintenance Direct cost Processing Administration 0 0 10% $86,000 Variable costs Fixed costs Total costs Avoidable fixed costs C. 50% 0 20% a. Processing Department b. Administration Department Maintenance Department $590,000 Maintenance 0 0 0 $256,000 Maximum Amount Branches 10% 60% 20% $4,400,000 The cost accountant at Great Eastern Credit Union estimates that the cost structures in its departments are as follows. Processing Administration Maintenance Branches $133,000 $1,800,000 $60,000 26,000 $153,000 437,000 123,000 2,600,000 $86,000 $256,000 $4,400,000 $590,000 $276,000 $ 8,000…
Exercise 11-32 (Algo) Cost Allocation: Reciprocal Method (LO 11-1) Woodstock Binding has two service departments, IT (information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with cach IT request) in each department and HR casts on the basis of employees in each department The following data appear in the company records for the current period: IT HR IT tickets 1,555 Publishing 2,488 Binding 2,177 Employees 18 ° Department direct costs $ 154,488 $ 248,490 27 $432,200 45 $395,500 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. From: Service department coas IT HR Total Cost Allocation To: IT HR Publishing Binding
Exercise 11-33 (Algo) Cost Allocation: Direct Method (LO 11-1) Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT Accounting HR IT 8% 10% The direct costs of the service departments in the previous period were $91,750 for IT, $119,000 for Accounting, and $162,500 for HR. HR allocation Total costs allocated Accounting HR West East 81% 40% 20% 40% 0% 40% 60% 10% 60% 20% Required: Use the direct method to allocate the service department costs to the production departments. Note: Amounts to be deducted should be indicated by a minus sign. Do not round Intermediate calculations. Service department costs IT allocation Accounting allocation IT Accounting HR West East
Refer to Cornerstone Exercise 7.3. Now assume that Valron Company uses the reciprocal method to allocate support department costs. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the reciprocal method. 2. Develop a simultaneous equations system of total costs for the support departments. Solve for the total reciprocated costs of each support department. (Round reciprocated total costs to the nearest dollar.) 3. Using the reciprocal method, allocate the costs of the Human Resources and General Factory departments to the Fabricating and Assembly departments. (Round all allocated costs to the nearest dollar.) 4. What if the square footage in Fabricating were 13,300 and the square footage in Assembly were 5,700. How would that affect the allocation of support department costs?
Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-3, 4) Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded: Supplying Department Using Department Processing Administration Maintenance Branches Electronic Processing 0 40 % 0 15 % 45 % Administration 0 0 0 60 % 40 % Maintenance 10 % 20 % 0 20 % 50 % Direct cost $ 89,000 $ 590,000 $ 310,000 $ 4,900,000 $ 1,950,000 Required: Allocate the service department costs to the two operating departments using the reciprocal method.
Exercise 11-32 (Algo) Cost Allocation: Reciprocal Method (LO 11-1) Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating epartments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT equest) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs From: Service department costs IT HR Total $ IT 0 22 $ 153,200 IT Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. HR 1,540 0 $ 248,220 0$ Publishing 2,464 33 $ 431,600 Cost Allocation To: HR Publishing 05 Binding 0 $ 2,156 55 $394,000 Binding 0
Comprehensive support department allocationsManagement 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 $1,094,100 14 $541,940 Human resources 689,780 11 408,380 Advertising 1,340,920 17 1,067,360 Circulation 1,893,640 36 2,618,420 Totals $5,018,440 78 $4,636,100 c. Assuming that the benefits-provided ranking is the order shown in the table, use the step method to allocate the support department costs to the revenue-generating departments.Note: Round your final answers only to the nearest whole dollar. Amount allocated…
Exercise 11-32 (Algo) Cost Allocation: Reciprocal Method (LO 11-4) Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Proportion of Services Used by Department Direct Costs Maintenance Cafeteria Machining Assembly Machining $ 140,000 Assembly 80,000 Maintenance 47,000 — 0.2 0.5 0.3 Cafeteria 38,000 0.8 — 0.1 0.1 Required: Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.) (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)
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