Candice Corporation produces reusable christmas cards in two departments: Printingand Laminating. These departments are supported by two service departments:Personnel and Maintenance. Personnel uses.the number of employees as an allocationbase and Maintenance uses machine hours. The expected level of activity for nextquarter is shown below:No. of employees Machine hoursPersonnel40Maintenance60120PrintingLaminating60,00040,000180Allocations are made in the order shown above. Budgeted costs for next quarter areP93,000 for Personnel and P68,000 for Maintenance. 16. What is the total amount of service cost that should be allocated to the PrintingDepartment under the direct and step method?Step methodP 77,070Direct methodа..P 68,700b.P 77,070P 78,000edtetiosac oP 78,000P 78,000с.P 81,100d..P 77,070

Answer 1) Direct Method: Under direct method, service department costs are allocated to production…

Candice Corporation produces reusable christmas cards in two departments: Printing and Laminating. These departments are supported by two service departments: Personnel and Maintenance. Personnel uses.the number of employees as an allocation base and Maintenance uses machine hours. The expected level of activity for next quarter is shown below: No. of employees Machine hours 40 Personnel Maintenance 60 120 Printing Laminating 60,000 40,000 180 Allocations are made in the order shown above. Budgeted costs for next quarter are P93,000 for Personnel and P68,000 for Maintenance.

Candice Corporation produces reusable christmas cards in two departments: Printing and Laminating. These departments are supported by two service departments: Personnel and Maintenance. Personnel uses.the number of employees as an allocation base and Maintenance uses machine hours. The expected level of activity for next quarter is shown below: No. of employees Machine hours 40 Personnel Maintenance 60 120 Printing Laminating 60,000 40,000 180 Allocations are made in the order shown above. Budgeted costs for next quarter are P93,000 for Personnel and P68,000 for Maintenance.

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...

See similar textbooks

Similar questions

University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. The following data appear in the company records for the current period: Maintenance Personnel Printing Developing Machine-hours — 1,800 1,800 5,400 Labor-hours 650 — 650 2,600 Department direct costs $4,000 $14,000 $15,900 $12,600 Required: Use the direct method to allocate these service department costs to the operating departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Maintenance Personnel Printing Developing service dept. costs maintenance allocation personnel allocation total cost allocation
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. The following data appear in the company records for the current period: Maintenance Printing 1,300 Developing 3,900 3,100 $11,600 Personnel Machine-hours 1,300 006 $15,200 Labor-hours 900 Department direct costs $3,600 $13,600 Required: Use the direct method to allocate these service department costs to the operating departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Maintenance Personnel Printing Developing Service department costs Maintenance allocation Personnel allocation Total costs allocated 0 $ 0 $
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT HR Publishing Binding IT tickets 0 1,700 1,700 5,100 Employees 16 0 24 40 Department direct costs $ 156,000 $ 266,200 $ 430,000 $ 390,000 Required: Use the step method to allocate the service costs, using the following: The order of allocation starts with IT. The order of allocation starts with HR.
A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine 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.
Thayne Company has 30 clerks that work in its Accounts Payable Department. A study revealed the following activities and the relative time demanded by each activity: Required: Classify the four activities as value-added or non-value-added, and calculate the clerical cost of each activity. For non-value-added activities, indicate why they are non-value-added.
Big Mikes, a large hardware store, has gathered data on its overhead activities and associated costs for the past 10 months. Nizam Sanjay, a member of the controllers department, believes that overhead activities and costs should be classified into groups that have the same driver. He has decided that unloading incoming goods, counting goods, and inspecting goods can be grouped together as a more general receiving activity, since these three activities are all driven by the number of receiving orders. The 10 months of data shown below have been gathered for the receiving activity. Required: 1. Prepare a scattergraph, plotting the receiving costs against the number of purchase orders. Use the vertical axis for costs and the horizontal axis for orders. 2. Select two points that make the best fit, and compute a cost formula for receiving costs. 3. Using the high-low method, prepare a cost formula for the receiving activity. 4. Using the method of least squares, prepare a cost formula for the receiving activity. What is the coefficient of determination?
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.
Chrome Solutions Company manufactures special chromed parts made to the order and specifications of the customer. It has two production departments, Stamping and Plating, and two service departments, Power and Maintenance. In any production department, the job in process is wholly completed before the next job is started. The company operates on a fiscal year, which ends September 30. Following is the post-closing trial balance as of September 30: Additional information: The balance of the materials account represents the following: The company uses the FIFO method of accounting for all inventories. Material A is used in the Stamping Department, and materials B and C are used in the Plating Department. The balance of the work in process account represents the following costs that are applicable to Job 905. (The customer’s order is for 1,000 units of the finished product.) The finished goods account reflects the cost of Job 803, which was finished at the end of the preceding month and is awaiting delivery orders from the customer. At the beginning of the year, factory overhead application rates were based on the following data: In October, the following transactions were recorded: Purchased the following materials and supplies on account: The following materials were issued to the factory: Customers’ orders covered by Jobs 1001 and 1002 are for 1,000 and 500 units of finished product, respectively. Factory wages and office, sales, and administrative salaries are paid at the end of each month. (Assume FICA and federal income tax rates of 8% and 10%, respectively.) Record the company’s liability for state and federal unemployment taxes. (Assume rates of 4% and 1%, respectively, and that none of the employees had reached the $8,000 limit.) Record the payroll distribution for October. Wages of the supervisors, custodial personnel, etc., totaled $9,500; administrative salaries were $18,300. Miscellaneous factory overhead incurred during October totaled $4,230. Miscellaneous selling and administrative expenses were $1,500. These items as well as the FICA tax and federal income tax withheld for September were paid. (See account balances on the post-closing trial balance for September 30.) Annual depreciation on plant assets is calculated using the following rates (round to nearest dollar): Factory buildings–5% Machinery and equipment–20% Office equipment–20% The balance of the prepaid insurance account represents a three-year premium for a fire insurance policy covering the factory building and machinery. It was paid on the last day of the preceding month and became effective on October 1. The summary of factory overhead prepared from the factory overhead ledger is reproduced here: The total expenses of the Maintenance Department are distributed on the basis of floor space occupied by the Power Department (8,820 sq ft), Stamping Department (19,500 sq ft), and Plating Department (7,875 sq ft). The power department expenses are then allocated equally to the Stamping and Plating departments. After the actual factory overhead expenses have been distributed to the departmental accounts and the applied factory overhead has been recorded and posted, any balances in the departmental accounts are transferred to Under- and Overapplied Overhead. Jobs 905 and 1001 were finished during the month. Job 1002 is still in process at the end of the month. During the month, Jobs 803 and 905 were sold with a mark-on percentage of 50% on cost. Received $55,500 from customers in payment of their accounts. Checks were issued in the amount of $43,706 for payment of the payroll. Required: Set up the beginning trial balance in T-accounts. Prepare materials inventory ledger cards and enter October 1 balances. Prepare a Payroll Summary and Schedule of Earnings and Payroll Taxes for the month of October. Set up job cost sheets as needed. Record all transactions and related entries for October and post to T-accounts. Prepare a service department expense distribution worksheet for October. At the end of the month: Analyze the balance in the materials account, the work in process account, and the finished goods account. Prepare the statement of cost of goods manufactured for the month ended October 31.
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. The following data appear in the company records for the current period: Printing 1,600 Maintenance Developing 4,800 3,300 $12,900 Personnel Machine-hours 1,600 Labor-hours 700 700 Department direct costs $4,400 $14,400 $15,500 Required: Allocate the service department costs using the step method, starting with the Maintenance Department. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Maintenance Personnel Printing Developing Service department costs Maintenance Personnel Total costs allocated $ 0 $ $ $
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT HR Publishing Binding IT tickets 0 1,500 2,400 2,100 Employees 16 0 24 40 Department direct costs $150,000 $247,500 $430,000 $390,000 Required: Use the direct method to allocate these service department costs to the operating departments. Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Round "Publishing" and "Binding" answers to 2 decimal places. IT HR Publishing Binding Service Department Costs IT Allocation HR Allocation Total Costs Allocated $ $ $ $
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT HR Publishing Binding IT tickets 0 1,500 2,400 2,100 Employees 16 0 24 40 Department direct costs $ 150,000 $ 247,500 $ 430,000 $ 390,000 Required: Use the step method to allocate the service costs, using the following:The order of allocation starts with HR.Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Cost Allocation To: Cost Allocation To: Cost Allocation To: Cost Allocation To: From: HR IT Publishing Binding Service department costs HR IT Total costs $ $ $ $
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT HR Publishing Binding IT tickets 0 1,500 2,400 2,100 Employees 16 0 24 40 Department direct costs $ 150,000 $ 247,500 $ 430,000 $ 390,000 Required: Use the step method to allocate the service costs, using the following:The order of allocation starts with IT.Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Costs Allocated To: Costs Allocated To: Costs Allocated To: Costs Allocated To: From: IT HR Pubishing Binding Service department costs IT HR Total Costs $ $ $ $