6. A Company has two service departments, Facilities and Human Resources, as well as two line departments, Machining and Assembly. Facilities Department costs are allocated based on square footage and Human Resources Department costs are allocated based on number of employees. The following data was available: Facilities Human Res. Machining $210,000 $180,000 $76,000 2,000 4,000 20 Direct costs Square footage Number of employees Direct labor hours 1,000 30 60 8,000 Assembly $85,000 6,000 100 6,000 a) Use the direct method to allocate service department costs to line departments b) Use the step-down method to allocate service department costs to line departments. Start with facilities.

6. A Company has two service departments, Facilities and Human Resources, as well as two line departments, Machining and Assembly. Facilities Department costs are allocated based on square footage and Human Resources Department costs are allocated based on number of employees. The following data was available: Facilities Human Res. Machining $210,000 $180,000 $76,000 2,000 4,000 20 Direct costs Square footage Number of employees Direct labor hours 1,000 30 60 8,000 Assembly $85,000 6,000 100 6,000 a) Use the direct method to allocate service department costs to line departments b) Use the step-down method to allocate service department costs to line departments. Start with facilities.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...

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A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The building maintenance department services all departments of the company, and its costs are allocated using floor space occupied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
Refer to the data in Exercise 7.22. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the costs of the support departments using the sequential method. (Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar.) 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Refer to the data in Exercise 7.22. The company has decided to simplify its method of allocating support service costs by switching to the direct method. Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. (Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar.) 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
A company calculated the predetermined overhead based on an estimated overhead of $70.000, and the activity for the cost driver was estimated as 2,500 hours. If product A utilized 1,350 hours and product 8 utilized 1,100 hours, what was the total amount of overhead assigned to the products? A. $35000 B. $30.800 C. $37,800 D. $68,600
The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
Refer to the data in Exercise 7.18. When the capacity of the HR Department was originally established, the normal usage expected for each department was 20,000 direct labor hours. This usage is also the amount of activity planned for the two departments in Year 1 and Year 2. Required: 1. Allocate the costs of the HR Department using the direct method and assuming that the purpose is product costing. 2. Allocate the costs of the HR Department using the direct method and assuming that the purpose is to evaluate performance.
Refer to the data in Exercise 7.20. The company has decided to use the sequential method of allocation instead of the direct method. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the overhead costs to the producing departments using the sequential method. (Take allocation ratios out to four significant digits. Round allocated costs to the nearest dollar.) 2. Using machine hours, compute departmental overhead rates. (Round the overhead rates to the nearest cent.)
12) Extreme Manufacturing Company provides the following ABC costing information: drivers Total Costs Activity-cost $280,000 $350,000 $93,750 $29,000 $752,750 Account inquiry Account billing 14,000 hours 7,000,000 lines Account verification accounts 50,000 accounts Correspondence letters Total costs 4,000 letters Dr.Audeh Ah 3 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours Account billing lines 2100 hours 3600 hours 500,000 lines 350,000 lines Account verification accounts 7,000 accounts 5,000 accounts Correspondence letters 1200 letters 1600 letters How much of the total costs will be assigned to Department A? A) $88,825 B) $118,825 C) $120,000 D) $85,075
Service Department Cost Allocation Presented below are certain operating data for the four departments of Tally Manufacturing Company. Service Production 1 2 1 2 Total manufacturing overhead costs either identifiable with or allocated to each department $120,000 $144,000 $180,000 $196,000 Square feet of factory floor space 80,000 160,000 Number of factory workers 60 20 Planned direct labor hours for the year 40,000 60,000 Allocate, to the two production departments, the costs of service departments 1 and 2, using factory floor space and number of workers, respectively, as bases. Do not round bases when calculating reallocations of service departments. Production 1 2 Identifiable and allocated overhead Reallocation of service departments: Dept. 1 Factory floor space Dept. 2 Number of factory workers Total manufacturing overhead What is the apparent overhead rate for each…
1. Logo Inc. has two data services departments (Systems and Facilities) that provide support to the company's three production departments (Machining, Assembly, and Finishing). The overhead costs of the Systems Department are allocated to other departments on the basis of computer usage hours. The overhead costs of the Facilities Department are allocated based on square feet occupied (in thousands). Other information pertaining to Logo is as follows. Department Overhead Computer Usage Hours Square Feet Occupied Systems Facilities $200,000 300 1,000 100,000 900 600 Machining Assembly Finishing Totals 400,000 3,600 2,000 550,000 1,800 3,000 620,000 2,700 5,000 9,300 11,600
Finney Inc. has conducted an analysis of overhead costs related to one of its product lines using a traditional costing system (volume-based) and an activity-based costing system. Here are its results. Traditional Costing ABC Sales revenue $600,000 $600,000 Overhead Costs: Product RX3 $34,000 $50,000 ProductY12 36,000 20,000 $70,000 $70,000Explain how a difference in the overhead costs between the two systems may have occurred.
Sequential (Step) Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments HumanResources GeneralFactory Fabricating Assembly Direct costs $165,000 $380,000 $114,200 $90,000 Normal activity: Number of employees — 40 70 150 Square footage 1,800 — 5,500 13,200 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded…