None Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnelcosts are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operationsfollows:EmployeesHoursDepartment direct costsPersonnelLegalEasternWestern04010,800$ 300,00001205,400$ 160,000$ 1,200,000401,800$ 790,000Baldwin Enterprises estimates that the cost structure in its operations is as follows:Variable costsFixed costsPersonnel$185,000235,000Legal$ 53,000131,000Eastern$ 990,000354,000Total costsAvoidable fixed costs$ 420,000$ 62,000$ 184,000$ 32,000$ 1,344,000$ 270,000Western$ 572,000242,000$ 814,000$ 270,000Required:a. If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs?b. If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs?c. If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor withoutincreasing total costs?

Before making any decision regarding the outsourcing of any product or entire department business…

Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Personnel Legal Eastern Western е 40 10,800 $ 300,000 120 5,400 40 $ 160,000 $ 1,200,000 1,800 $ 790,000 Variable costs Fixed costs Personnel $185,000 235,000 Total costs Avoidable fixed costs $ 420,000 $ 62,000 Baldwin Enterprises estimates that the cost structure in its operations is as follows: Eastern $ 990,000 354,000 Western $ 572,000 242,000 $ 814,000 Legal $ 53,000 131,000 $ 184,000 $ 32,000 $ 1,344,000 $ 270,000 $ 270,000 Required: a. If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs? b. If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs? c. If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor without increasing total costs?

Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Personnel Legal Eastern Western е 40 10,800 $ 300,000 120 5,400 40 $ 160,000 $ 1,200,000 1,800 $ 790,000 Variable costs Fixed costs Personnel $185,000 235,000 Total costs Avoidable fixed costs $ 420,000 $ 62,000 Baldwin Enterprises estimates that the cost structure in its operations is as follows: Eastern $ 990,000 354,000 Western $ 572,000 242,000 $ 814,000 Legal $ 53,000 131,000 $ 184,000 $ 32,000 $ 1,344,000 $ 270,000 $ 270,000 Required: a. If Baldwin outsources the Legal Department, what is the maximum it can pay an outside vendor without increasing total costs? b. If Baldwin outsources the Personnel Department, what is the maximum it can pay an outside vendor without increasing total costs? c. If Baldwin outsources both the Personnel and the Legal Departments, what is the maximum it can pay an outside vendor without increasing total costs?

Managerial Accounting

15th Edition

ISBN:9781337912020

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

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

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 7E: Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments,...

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Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Costs Personnel Legal Complete this question by entering your answers in the tabs below. Total Personnel $ Personnel $ 10,800 $ 320,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method. 320,000 $ 320,000 $ Required A Required B Required C Allocate the cost of the service departments to the operating divisions using the reciprocal method. Note: Do not round intermediate calculations. Round your final answers…
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting Domestic International Employees 22 45 33 Transactions 36,000 $361,000 19,000 $945,000 76,000 Department direct costs $149,000 $3,670,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departments using the reciprocal methoc Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Required C Allocate the cost of the service departments to the…
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting Domestic International Employees — 25 15 60 Transactions 50,000 — 10,000 40,000 Department direct costs $ 61,000 $ 22,500 $ 155,000 $ 593,000 BluStar estimates that the cost structure in its operations is as follows. Administration Accounting Domestic International Variable costs $ 23,500 $ 5,200 $ 114,500 $ 425,000 Fixed costs 37,500 17,300 40,500 168,000 Total costs $ 61,000 $ 22,500 $ 155,000 $ 593,000 Avoidable fixed costs $ 9,750 $ 4,000 $ 18,000 $ 114,000 Required: a. If BluStar outsources the Administration Department, what is…
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Employees Transactions Department direct costs Required A Administration 37,000 $363,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departments using the reciprocal method. Complete this question by entering your answers in the tabs below. Required B Required C From Accounting Domestic International 26 47 22,000 $141,000 $955,000 Department costs Administration allocation Accounting allocation Total cost Allocate the cost…
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting domestic International Employees – 21 36 43 Transactions 32,000 – 21,000 84,000 Department direct costs 360,000 140,000 $ 935,000 $ 3,730,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method.b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration.c. Allocate the cost of the service departments to the operating departments using the reciprocal method.
Renata Company has four departments: Materials, Personnel, Manufacturing, and Packaging. Information follows. Department Materials Personnel Manufacturing Packaging Employees Square Feet Asset Values $ 7,900 4,740 45,820 20,540 $ 79,000 38 19 76 57 64,750 9,250 92,500 18,500 Total 190 185,000 The four departments share the following indirect expenses for supervision, utilities, and insurance according to their allocation bases. Indirect Expense Supervision Utilities Cost Allocation Base $ 84,400 Number of employees 69,000 Square feet occupied 32,000 Asset values $ 185,400 Insurance Total Allocate each of the three indirect expenses to the four departments. Supervision Cost to be Allocated Allocation Base Percent of Allocation Base Allocated Cost expenses Department Numerator Denominator % of Total Materials Personnel Manufacturing Packaging Totals Cost to be Allocated Utilities Allocation Base Percent of Allocation Base Allocated Cost Department Numerator Denominator % of Total…
Renata Company has four departments: Materials, Personnel, Manufacturing, and Packaging. Information follows. Department Square Feet Asset Values Employees Materials 40 60,000 $ 9,750 Personnel 8 7,500 1,300 Manufacturing Packaging 64 67,500 33,800 48 15,000 20,150 Total 160 150,000 $ 65,000 The four departments share the following indirect expenses for supervision, utilities, and insurance according to their allocation bases. Indirect Expense Supervision Utilities Insurance Total Cost $ 83,000 Number of employees Allocation Base 55,000 Square feet occupied 25,000 Asset values $ 163,000 Allocate each of the three indirect expenses to the four departments.
Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Personnel Legal Eastern Western Employees - 40 120 40 Hours 10,800 - 5,400 1,800 Department direct costs $ 300,000 $ 160,000 $ 1,200,000 $ 790,000 Required: Allocate the cost of the service departments to the operating divisions using the direct method. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. Allocate the cost of the service departments to the operating divisions using the reciprocal method.
Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Personnel 120 10,800 $ 300,000 5,400 $ 1,200,000 $ 160,000 Baldwin Enterprises estimates that the cost structure in its operations is as follows: Employees Hours Department direct costs Variable costs Fixed costs Total costs Avoidable fixed costs Personnel $200,000 250,000 $ 450,000 $ 65,000 Required A Required B Required C Legal Maximum amount 40 0 Legal $ 56,000 134,000 $ 190,000 $ 35,000 Eastern Complete this question by entering your answers in the tabs below. Western $575,000 245,000 $ 820,000 $300,000
Smokey & the Bandit Corporation has three production departments Alpha, Beta, and Gamma. Smokey & the Bandit also has two service departments, Human Resources and Technology. Technology costs are allocated based on value of assets employed, and Human Resources costs are allocated based on number of employees. Assume that Technology provides more service to the other departments than does the Human Resources Department. Dept. Direct Costs Employees Asset Value Technology $900,000 25 Human Resources 350,000 $600,000 Alph 700,000 15 300,000 Beta 200,000 5 150,000 Gamma 250,000 10 800,000 Using the direct method, what amount of Human Resources costs is allocated to Alpha (round to the nearest dollar)? Group of answer choices $95.455 $350,000 $175,000 $450,000 The Frugal Bandit uses a standard cost system and applied overhead based on direct labor hours. In March, the company produced 4,500 units…
Lewis Corporation has two service departments: Data Processing and Administration/Personnel. The company also has three divisions: X, Y, and Z. Data Processing costs are allocated based on hours of use and Administration/Personnel costs are allocated based on number of employees. Department Direct Costs Employees Hours of use Administration/ Personnel $400,000 10 3,300 Data Processing 850,000 5 1,100 X. 450,000 30 1,800 300.000 15 2,200 550.000 25 4,500 Assume that Data Processing provides more service than Administration/Personnel. Refer to Lewis Corporation. Assume that Data Processing costs have been allocated and the balance in Administration is $600,000. Using the step method, what amount is allocated to Z? Select one: a. $214,286 b. $200,000 c. $225,000 d. $112,500
Koehl Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Wholesaling. Service Departments Operating Department Assembly wholesaling $ 185,580 Administrative Facilities $ 19,440 $ 71,340 $ 392,950 Departmental costs Employee hours Space occupied 2,000 1,000 14,000 2,000 4,000 22,000 2,000 39,000 Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied. The total Wholesaling Department cost after the allocations of service department costs is closest to: Multiple Choice $403.990 $396,430 $403,642 $402,601