Tom & Jerry Publishers (TJP) is a publisher for books for children. It has four departments viz. HR, Finance, Printing and Packaging. TJP treats first two as support departments and other two as production departments. The company uses Asset Value as a driver for finance department and employee Head Count as a driver for HR department allocation. Following is the data available with regards to April 20X1. Specifics HR Finance Printing Packaging Asset Value $150,000 $200,000 $1,400,000 $400,000 Head Count 8 15 40 20 Department Costs $250,000 $100,000 $1,500,000 $200,000 Calculate the final costs of all the four departments for the month of April after allocation to Printing and packaging using: (scoring 5+10+10=25) Direct method HR Finance Printing Packaging Department costs 250,000 100,000 1,500,000 200,000 Allocation of HR department costs (40:20) -250,000 Allocation of Financial department costs 100,000 0 0 Sequential method assuming that HR is primary support department Reciprocal method

Tom & Jerry Publishers (TJP) is a publisher for books for children. It has four departments viz. HR, Finance, Printing and Packaging. TJP treats first two as support departments and other two as production departments. The company uses Asset Value as a driver for finance department and employee Head Count as a driver for HR department allocation. Following is the data available with regards to April 20X1. Specifics HR Finance Printing Packaging Asset Value $150,000 $200,000 $1,400,000 $400,000 Head Count 8 15 40 20 Department Costs $250,000 $100,000 $1,500,000 $200,000 Calculate the final costs of all the four departments for the month of April after allocation to Printing and packaging using: (scoring 5+10+10=25) Direct method HR Finance Printing Packaging Department costs 250,000 100,000 1,500,000 200,000 Allocation of HR department costs (40:20) -250,000 Allocation of Financial department costs 100,000 0 0 Sequential method assuming that HR is primary support department Reciprocal method

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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eBook Show Me How Question Content Area Cost Department Allocations In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $48,108, and the Purchasing Department had expenses of $25,080 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Line Item Description Residential Commercial Government Contract Sales $524,000 $695,000 $1,595,000 Number of employees: Weekly payroll (52 weeks per year) 115 80 85 Monthly payroll 38 49 36 Number of purchase requisitions per year 2,400 1,700 1,600 Required: a. Determine the total amount of payroll checks and purchase requisitions processed per year by the…
Lucia Company has two service departments: Office and Purchasing. Total expenses for the Office is $24,000 and for Purchasing is $34,000. 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 Books Magazines Newspapers Total Office Department Books Magazines Newspapers Allocate the expenses from (a) the Office and (b) Purchasing to each of the company's three operating departments using the given information. Totals Purchasing Department Books Magazines Newspapers Sales $ 495,000 198,000 207,000 $ 900,000 Totals Purchase Orders Allocation Base 516 360 324 1,200 Allocation Base Percent of Allocation Base Numerator Denominator % of Total Percent of Allocation Base Numerator Denominator % of Total Cost to be Allocated Cost to be Allocated Allocated Cost Allocated Cost
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Assume you are the department B manager for Marley's Manufacturing. Marley's operates under a cos based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). The income statement for Marley's Manufacturing is shown below: Marley's Manufacturing Income Statement Month Ending August 31, 2018 Dept. A Dept. B Sales $21,000 $51,000 Cost of goods sold 10,290 27,030 Gross profit $10,710 $23,970 Utility expenses 1,050 3,570 Wages expense 5,250 10,200 Costs allocated from corporate 1,890 15,300 Total expenses $8,190 $29,070 Operating income/(loss) in dollars $2,520 -$5,100 Operating income/(loss) in percentage 12 % -10 % Assume the market price for the items your department purchase is 15% below what you are being charged by department A of Marley's Manufacturing. Determine the operating income for department B, assuming department A "sold" department B 1,000 units during the month and…
The following cost data pertain to the operations of Montgomery Department Stores, Incorporated, for the month of July. Corporate legal office salaries Apparel Department cost of sales-Evendale Store Corporate headquarters building lease Store manager's salary-Evendale Store Apparel Department sales commission-Evendale Store Store utilities-Evendale Store Apparel Department manager's salary-Evendale Store Central warehouse lease cost Janitorial costs-Evendale Store $ 56,000 $ 90,000 $ 48,000 $ 12,000 $ 7,000 $ 11,000 $ 8,000 $ 15,000 $ 9,000 The Evendale Store is one of many stores owned and operated by the company. The Apparel Department is one of many departments at the Evendale Store. The central warehouse serves all of the company's stores. Required: 1. What is the total amount of the costs listed above that are direct costs of the Apparel Department? 2. What is the total amount of the costs listed above that are direct costs of the Evendale Store? 3. What is the total amount of…
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