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Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Sourcing Departments Sourcing Operations Assembly Finishing Total Sourcing Operations The costs incurred in the plant are as follows: Total Labor Hours Used by Departments Assembly Operations 20,000 40,000 60,000 10,000 Departmental Costs $ 183,000 235,000 422,000 267,000 $ 1,107,000 Finishing 60,000 50,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) a. Direct Method Assembly Finishing b. Step Method Assembly Finishing c. Reciprocal Method Assembly Finishing Total Service Department Cost Allocated Total Production Cost

Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Sourcing Departments Sourcing Operations Assembly Finishing Total Sourcing Operations The costs incurred in the plant are as follows: Total Labor Hours Used by Departments Assembly Operations 20,000 40,000 60,000 10,000 Departmental Costs $ 183,000 235,000 422,000 267,000 $ 1,107,000 Finishing 60,000 50,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) a. Direct Method Assembly Finishing b. Step Method Assembly Finishing c. Reciprocal Method Assembly Finishing Total Service Department Cost Allocated Total Production Cost

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 20GI
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Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Sourcing Departments Sourcing Operations Assembly Finishing Total Sourcing Operations The costs incurred in the plant are as follows: Total Labor Hours Used by Departments Assembly Operations 20,000 40,000 60,000 10,000 Departmental Costs $ 183,000 235,000 422,000 267,000 $ 1,107,000 Finishing 60,000 50,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
Transcribed Image Text:Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Sourcing Departments Sourcing Operations Assembly Finishing Total Sourcing Operations The costs incurred in the plant are as follows: Total Labor Hours Used by Departments Assembly Operations 20,000 40,000 60,000 10,000 Departmental Costs $ 183,000 235,000 422,000 267,000 $ 1,107,000 Finishing 60,000 50,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
a. Direct Method Assembly Finishing b. Step Method Assembly Finishing c. Reciprocal Method Assembly Finishing Total Service Department Cost Allocated Total Production Cost
Transcribed Image Text:a. Direct Method Assembly Finishing b. Step Method Assembly Finishing c. Reciprocal Method Assembly Finishing Total Service Department Cost Allocated Total Production Cost
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