Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $38,900 and for Purchasing is $38,900. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders. Department Books Magazines Newspapers Total Sales $ 180,000 108,000 72,000 Purchase Orders 984 600 816 $ 360,000 2,400 Allocate the expenses from (a) the Office and (b) Purchasing to each of the company's three operating departments using the given information. Office Allocation Base Department Percent of Allocation Base Numerator Denominator % of Total Cost to be Allocated Allocated Cost Books 0 Magazines 0 Newspapers 0 Totals 0 Purchasing Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Books 0 Magazines 0 Newspapers 0 Totals 0

Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $38,900 and for Purchasing is $38,900. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders. Department Books Magazines Newspapers Total Sales $ 180,000 108,000 72,000 Purchase Orders 984 600 816 $ 360,000 2,400 Allocate the expenses from (a) the Office and (b) Purchasing to each of the company's three operating departments using the given information. Office Allocation Base Department Percent of Allocation Base Numerator Denominator % of Total Cost to be Allocated Allocated Cost Books 0 Magazines 0 Newspapers 0 Totals 0 Purchasing Allocation Base Percent of Allocation Base Cost to be Allocated Allocated Cost Department Numerator Denominator % of Total Books 0 Magazines 0 Newspapers 0 Totals 0

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 2CE: Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each...

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Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $25,000 and for Purchasing is $56,200. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders. Department Sales Purchase Orders Books $ 186,200 546 Magazines 95,000 364 Newspapers 98,800 390 Total $ 380,000 1,300 Allocate the expenses from (a) the Office and (b) Purchasing to each of the company's three operating departments using the given information.
Marcus Company has two service departments: Office and Purchasing. Total expenses for the Office is $60,000 and for Purchasing is $80,000. Expenses for the Office are allocated to operating departments based on sales. Expenses for Purchasing are allocated to operating departments based on purchase orders. Department Sales Purchase Orders Books $ 1,056,000 1,548 Magazines 422,400 1,080 Newspapers 441,600 972 Totals $ 1,920,000 3,600 Expenses allocated from the Purchasing department to the company’s Newspaper department are:
Advertising department expenses of $57,200 and purchasing department expenses of $45,800 of Cozy Bookstore are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows. Department Sales Purchase Orders Books $ 167,200 1,290 Magazines 76,000 900 Newspapers 136,800 810 Total $ 380,000 3,000 Complete the following table by allocating the expenses of the two service departments (advertising and purchasing) to the three operating departments.
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Morrell Financial Services (MFS) has three service departments: Accounting, Information Technology (IT), and Personnel. MFS also has two operating departments (Advice and Brokerage). Data on service department usage and service direct costs follow: Accounting IT Personnel Direct cost Using Department Accounting IT Personnel Advice 0% 16% 6% 23% 31% Brokerage 40% 0% 10% 29% 45% 11% 13% 0% 39% 37% $ 197,000 $ 281,000 $ 264,500 NA NA* *Not applicable for this problem. Required: Assume that Morrell Financial Services uses the reciprocal method of service department cost allocation. What is the total service department cost allocated to Advice? To Brokerage? (Hint: Use the reciprocal method spreadsheet shown in Exhibit 11.22 as a start to your analysis.) Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollars. Advice Brokerage Cost Allocated
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Pepper Depanment store aliocates ns service department espenses to s various operating sales) departments The folowing dats is avaitable for ts service departments Expense Dasts for allecation ADunt Rent Square feet of flnor space $47,000 47,000 62, 00 Advertising Amount of dollar sales Adainistrative Number of enployees The following information s aveitable for mu three opeating tuale departments Number of Department Square Feet 5,400 8, 100 13,500 Dollar Seles $ 302,000 $ 453, 00 S 755, 000 enployees 15 Totals 27,000 $3,510,000 What as the total expense allocated to Deparnment B Mutiple Choice $32.000 $42065 O s400 $42500 $40.000