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Comparison of Methods of Allocation Duweynie Pottery, Inc., is divided into two operating divisions: Pottery and Retail. The company allocates Power and General Factory department costs to each operating division. Power costs are allocated on the basis of the number of machine hours and general factory costs on the basis of square footage. No effort is made to separate fixed and variable costs; however, only budgeted costs are allocated. Allocations for the coming year are based on the following data: Use the rounded values for subsequent calculations. Overhead costs Retail $58,000 3,000 Square footage 6,000 Round all allocation ratios to four significant digits. Round all allocated amounts to the nearest dollar. Machine hours Cost Allocations Support Departments Allocation Ratios Proportion of machine hours Proportion of square footage Power Power General Factory Direct costs $150,000 2,000 2,500 Required: 1. Allocate the support service costs using the direct method. Note: Input to two decimal places. General Factory Pottery $ 105,000 68,640 171,600 245 240 $171,600 2,500 Pottery 1,700 0.7 0.4 Retail 45,000 102,960 98,000 245 050 Retail 0.3 Operating Divisions 0.6 Pottery $98,000 7,000 4,000

Comparison of Methods of Allocation Duweynie Pottery, Inc., is divided into two operating divisions: Pottery and Retail. The company allocates Power and General Factory department costs to each operating division. Power costs are allocated on the basis of the number of machine hours and general factory costs on the basis of square footage. No effort is made to separate fixed and variable costs; however, only budgeted costs are allocated. Allocations for the coming year are based on the following data: Use the rounded values for subsequent calculations. Overhead costs Retail $58,000 3,000 Square footage 6,000 Round all allocation ratios to four significant digits. Round all allocated amounts to the nearest dollar. Machine hours Cost Allocations Support Departments Allocation Ratios Proportion of machine hours Proportion of square footage Power Power General Factory Direct costs $150,000 2,000 2,500 Required: 1. Allocate the support service costs using the direct method. Note: Input to two decimal places. General Factory Pottery $ 105,000 68,640 171,600 245 240 $171,600 2,500 Pottery 1,700 0.7 0.4 Retail 45,000 102,960 98,000 245 050 Retail 0.3 Operating Divisions 0.6 Pottery $98,000 7,000 4,000

Principles of Cost Accounting
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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2. Allocate the support service costs using the sequential method. The support departments are ranked in order of highest cost to lowest cost. Note: If an amount is zero, enter "0". Input to two decimal places. Allocation Ratios Machine hours Square footage Cost Allocations Direct costs General Factory Power Cost after allocation Allocation Ratios Machine hours Square footage Cost Allocations General Factory Power Direct costs Power $ 3. Allocate the support service costs using the reciprocal method. Cost after allocation 2,000 2,500 Power $ 150,000 Note: If an amount is zero, enter "0". Input to two decimal places. General Factory Power Pottery 2,500 1,700 General Factory $ 171,600 General Factory Retail $ Pottery 7,000 4,000 Pottery 98,000 Pottery Retail 3,000 6,000 Retail $ 58,000 Retail
Transcribed Image Text:2. Allocate the support service costs using the sequential method. The support departments are ranked in order of highest cost to lowest cost. Note: If an amount is zero, enter "0". Input to two decimal places. Allocation Ratios Machine hours Square footage Cost Allocations Direct costs General Factory Power Cost after allocation Allocation Ratios Machine hours Square footage Cost Allocations General Factory Power Direct costs Power $ 3. Allocate the support service costs using the reciprocal method. Cost after allocation 2,000 2,500 Power $ 150,000 Note: If an amount is zero, enter "0". Input to two decimal places. General Factory Power Pottery 2,500 1,700 General Factory $ 171,600 General Factory Retail $ Pottery 7,000 4,000 Pottery 98,000 Pottery Retail 3,000 6,000 Retail $ 58,000 Retail
Comparison of Methods of Allocation Duweynie Pottery, Inc., is divided into two operating divisions: Pottery and Retail. The company allocates Power and General Factory department costs to each operating division. Power costs are allocated on the basis of the number of machine hours and general factory costs on the basis of square footage. No effort is made to separate fixed and variable costs; however, only budgeted costs are allocated. Allocations for the coming year are based on the following data: Use the rounded values for subsequent calculations. Overhead costs Machine hours Required: Allocation Ratios Cost Allocations Proportion of machine hours Proportion of square footage Power Support Departments Power General Factory $150,000 2,000 2,500 1. Allocate the support service costs using the direct method. Note: Input to two decimal places. Direct costs Square footage Round all allocation ratios to four significant digits. Round all allocated amounts to the nearest dollar. General Factory Pottery $ 105,000 68,640 171,600 $171,600 $ 345,240 2,500 1,700 Pottery 0.7 0.4 Retail $ 45,000 102,960 98,000 $ 245,960 Retail 0.3 Operating Divisions 0.6 Pottery $98,000 7,000 4,000 Retail $58,000 3,000 6,000
Transcribed Image Text:Comparison of Methods of Allocation Duweynie Pottery, Inc., is divided into two operating divisions: Pottery and Retail. The company allocates Power and General Factory department costs to each operating division. Power costs are allocated on the basis of the number of machine hours and general factory costs on the basis of square footage. No effort is made to separate fixed and variable costs; however, only budgeted costs are allocated. Allocations for the coming year are based on the following data: Use the rounded values for subsequent calculations. Overhead costs Machine hours Required: Allocation Ratios Cost Allocations Proportion of machine hours Proportion of square footage Power Support Departments Power General Factory $150,000 2,000 2,500 1. Allocate the support service costs using the direct method. Note: Input to two decimal places. Direct costs Square footage Round all allocation ratios to four significant digits. Round all allocated amounts to the nearest dollar. General Factory Pottery $ 105,000 68,640 171,600 $171,600 $ 345,240 2,500 1,700 Pottery 0.7 0.4 Retail $ 45,000 102,960 98,000 $ 245,960 Retail 0.3 Operating Divisions 0.6 Pottery $98,000 7,000 4,000 Retail $58,000 3,000 6,000
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