Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated ased on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Maintenance Security Cutting Sewing Department Department Department Department lachine hours sset value 800 2,000 7,600 10,400 $2,000 $1,420 $3,000 $5,000 Department cost $31,680 $14,080 $62,000 $79,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Sewing Department Cutting Department Production departments' total costs

Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated ased on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Maintenance Security Cutting Sewing Department Department Department Department lachine hours sset value 800 2,000 7,600 10,400 $2,000 $1,420 $3,000 $5,000 Department cost $31,680 $14,080 $62,000 $79,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Sewing Department Cutting Department Production departments' 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

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 6E: Davis Snowflake Co. produces Christmas stockings in its Cutting and Sewing departments. The...

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Support activity cost allocation Jakes Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenance costs are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Information regarding the activities is provided in the following table: Instructions 1. Should Maintenance costs continue to be allocated based on machine hours? Why would a different driver be more appropriate? 2. Based on your response to part (1), determine the total costs allocated from each support activity to the other activities using the reciprocal services method and the most appropriate cost driver for Maintenance. 3. Jakes Gems is considering cutting costs by switching to a simpler support activity cost allocation method. Using the information provided and given your response to part (2), determine if switching to the direct method would significantly alter the production activity costs.
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.
Support department cost allocation Blue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and Framing production departments are supported by the Janitorial and Security departments. Janitorial costs are allocated to the production departments based on square feet, and security costs are allocated based on asset value. Information about these departments is detailed in the following table: Management has experimented with different support department cost allocation methods in the past. The different allocation methods did not yield large differences of cost allocation to the production departments. Instructions 1. Determine which support department cost allocation method Blue Mountain Masterpieces would most likely use to allocate its support department costs to the production departments. 2. Determine the total costs allocated from each support department to each production department using the method you determined in part (1). 3. Without doing calculations, consider and answer the following: If Blue Mountain Masterpieces decided to use square feet instead of asset value as the cost driver for security services, how would this change the allocation of Security Department costs?
I need help with the following: Support department cost allocation—reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: MaintenanceDepartment SecurityDepartment CuttingDepartment SewingDepartment Machine hours 800    2,000 6,400    11,600 Asset value $2,000    $1,420 $1,500 $6,500 Department cost $36,720    $16,320 $64,000 $84,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. CuttingDepartment SewingDepartment…
Support department cost allocation—reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: MaintenanceDepartment SecurityDepartment CuttingDepartment SewingDepartment Machine hours 800    2,000 7,600    10,400 Asset value $2,000    $1,470 $2,500 $5,500 Department cost $41,760    $18,560 $68,000 $78,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method.
Support department cost allocation—reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: MaintenanceDepartment SecurityDepartment CuttingDepartment SewingDepartment Machine hours 800    2,000 6,800    11,200 Asset value $2,000    $1,380 $3,500 $4,500 Department cost $30,240    $13,440 $67,000 $85,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. CuttingDepartment SewingDepartment Production departmentsʼ total costs…
Support department cost allocation—reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: MaintenanceDepartment SecurityDepartment CuttingDepartment SewingDepartment Machine hours 800 2,000 7,600 10,400 Asset value $2,000 $1,380 $1,500 $6,500 Department cost $43,200 $19,200 $62,000 $84,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. CuttingDepartment SewingDepartment Production departmentsʼ total costs…
Support department cost allocation-reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Maintenance Security Cutting Sewing Department Department Department Department Machine hours 800 2,000 6,800 11,200 Asset value $2,000 $1,450 $3,000 $5,000 Department cost $33,120 $14,720 $67,000 $81,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Sewing Department Department Production departments total costs
Support Department Cost Allocation—Reciprocal Services Method Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Security departments support the production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security Department are allocated based on asset value. Relevant department information is provided in the following table: JanitorialDepartment SecurityDepartment MoldingDepartment AssemblyDepartment Square feet 630 1,800 1,800 5,400 Asset value $120 $140 $1,380 $1,500 Department cost $2,000 $1,200 $10,400 $12,700 Using the reciprocal services method of support department cost allocation, determine: a. The percentage of Janitorial costs that should be allocated to the Security Department.fill in the blank 1% b. The percentage of Security costs that should be allocated to the…
Support Department Cost Allocation—Reciprocal Services Method Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Security departments support the production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security Department are allocated based on asset value. Relevant department information is provided in the following table: Janitorial Department SecurityDepartment MoldingDepartment AssemblyDepartment Square feet 600 900 900 7,200 Asset value $400 $420 $2,100 $2,500 Department cost $1,700 $1,400 $10,400 $12,500 Using the reciprocal services method of support department cost allocation, determine: a. The percentage of Janitorial costs that should be allocated to the Security Department. % b. The percentage of Security costs that should be allocated to the Janitorial Department.…
Support department cost allocation-reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Machine hours Asset value Maintenance Department 800 $2,000 $36,000 Feedback Security Department 2,000 $1,670 $16,000 Cutting Department Production departments' total costs $ 63,436 X Cutting Department 7,200 $2,500 $64,000 Department cost Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Sewing Department $ 96,299.2 X Sewing Department 10,800 $5,500 $82,000 Check My Work The reciprocal services method considers all…
Support Department Cost Allocation-Reciprocal Services Method Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments, The Janitorial and Security departments support the production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security Department are allocated based on asset value. Relevant department information is provided in the following table: Janitorial Department Security Department Molding Department Assembly Department Square feet 650 1,600 1,600 4,800 Asset value $100 $120 $900 $1,000 Department cost $2,000 $1,500 $10,900 $12,100 < Using the reciprocal services method of support department cost allocation, determine: a. The percentage of Janitorial costs that should be allocated to the Security Department. % b. The percentage of Security costs that should be allocated to the Janitorial Department. %