Express Delivery Company (EDC) is considering of $222,600. An internally prepared report summarizes the Payroll Department's annual operating costs as follows: Supplies Payroll clerks' salaries Payroll supervisor's salary Payroll employee training expenses Depreciation of equipment Allocated share of common building operating costs Allocated share of common administrative overhead Total annual operating cost $ 32,600 122,600 60,600 12,600 22,600 17,600 30,600 $ 299,200 EDC currently rents overflow office space for $38,600 per year. If the company closes its Payroll Department, the employees occupying the rented office space could be brought in-house and the lease agreement on the rented space could be terminated with no penalty. If the Payroll Department is outsourced the payroll clerks will not be retained; however, the supervisor would be transferred to the company's Human Resource Management Department. As a result of this transfer, the company would discontinue its efforts to hire a new Human Resource Manager that it expected to pay an annual salary of $58,600.

Express Delivery Company (EDC) is considering of $222,600. An internally prepared report summarizes the Payroll Department's annual operating costs as follows: Supplies Payroll clerks' salaries Payroll supervisor's salary Payroll employee training expenses Depreciation of equipment Allocated share of common building operating costs Allocated share of common administrative overhead Total annual operating cost $ 32,600 122,600 60,600 12,600 22,600 17,600 30,600 $ 299,200 EDC currently rents overflow office space for $38,600 per year. If the company closes its Payroll Department, the employees occupying the rented office space could be brought in-house and the lease agreement on the rented space could be terminated with no penalty. If the Payroll Department is outsourced the payroll clerks will not be retained; however, the supervisor would be transferred to the company's Human Resource Management Department. As a result of this transfer, the company would discontinue its efforts to hire a new Human Resource Manager that it expected to pay an annual salary of $58,600.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

See similar textbooks

Similar questions

Express Delivery Company (EDC) is considering outsourcing its Payroll Department to a payroll processing company for an annual fee of $222,400. An internally prepared report summarizes the Payroll Department's annual operating costs as follows: Supplies Payroll clerks' salaries Payroll supervisor's salary Payroll employee training expenses Depreciation of equipment Allocated share of common building operating costs Allocated share of common administrative overhead Total annual operating cost $ 32,400 122,400 60,400 12,400 22,400 17,400 30,400 $ 297,800 EDC currently rents overflow office space for $38,400 per year. If the company closes its Payroll Department, the employees occupying the rented office space could be brought in-house and the lease agreement on the rented space could be terminated with no penalty. If the Payroll Department is outsourced the payroll clerks will not be retained; however, the supervisor would be transferred to the company's Human Resource Management…
Express Delivery Company (EDC) is considering outsourcing its Payroll Department to a payroll processing company for an annual fee of $224,000. An internally prepared report summarizes the Payroll Department's annual operating costs as follows: Supplies Payroll clerks' salaries Payroll supervisor's salary Payroll employee training expenses Depreciation of equipment Allocated share of common building operating costs Allocated share of common administrative overhead Total annual operating cost $ 34,000 124,000 62,000 14,000 24,000 19,000 32,000 $ 309,000 EDC currently rents overflow office space for $40,000 per year. If the company closes its Payroll Department, the employees occupying the rented office space could be brought in-house and the lease agreement on the rented space could be terminated with no penalty. If the Payroll Department is outsourced the payroll clerks will not be retained; however, the supervisor would be transferred to the company's Human Resource Management…
Sasha Company allocates the estimated $192,400 of its accounting department costs to its production and sales departments since the accounting department supports the other two departments particularly with regard to payroll and accounts payable functions. The costs will be allocated based on the number of employees using the direct method. Information regarding costs and employees follows: Department Employees Accounting 4 Production 37 Sales 16 How much of the accounting department costs will be allocated to the production?
Hughes Payroll and Clerical Services (HPCS) provides payroll, bookkeeping, and other services to small businesses. HPCS financial records show the following costs for last quarter (QTR 1): Supplies Employee costs Total administration $ 14,000 1,015,000 455,000 HPCS recorded 4,375 billable hours in QTR 1 and fixed administrative cost was $245,000. Assuming no change in billable hours in the next quarter (QTR 2), supplies costs are expected to increase by 5 percent. Direct labor costs are expected to increase by 12 percent. Variable administration per billable hour is expected to remain the same, but fixed administration cost is expected to decrease by 7 percent. Required: a. HPCS expects to bill 5,425 hours next quarter. What are the estimated direct materials, direct labor, variable overhead, and fixed overhead costs for next quarter (QTR 2)? b. Determine the total costs per billable hour for QTR 1 and QTR 2. Complete this question by entering your answers in the tabs below. Required A…
Brownley Company has one service department and two operating (production) departments. Payroll Department costs are allocated To the two operating departments in proportion to the number of employees in each. Listed below are the operating data for the current period: Direct Expenses $ 28,000 81,000 110,800 The total cost of operating the Milling Department for the current period is: Department Payroll Milling Assembly No. of Employees 45 105
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 tickets Employees Department direct costs IT 0 24 $ 151,600 HR 1,520 0 $ 247,860 Publishing 2,432 36 $430,800 Binding 2,128 60 $ 392,000 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations.
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 tickets Employees Department direct costs From: Service department costs IT HR Total IT $ 0 16 $ 152,000 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. HR 1,525 0 $ 247,950 152,000 Answer is not complete. Cost Allocation To: IT HR 152,000 $ 247,950 Publishing 2,440 24 $ 431,000 $ 247,950 Publishing $ Binding 2,135 40 $ 392,500 0 Binding 0
Crane Limited is a company that produces machinery to customer orders, using a normal job-order cost system. It applies manufacturing overhead to production using a predetermined rate. This overhead rate is set at the beginning of each fiscal year by forecasting the year's overhead and relating it to direct labour costs. The budget for 2022 was as follows: Direct labour Manufacturing overhead $1,810,000 As at the end of the year, two jobs were incomplete. These were 1768B, with total direct labour charges of $111,000, and 1819C, with total direct labour charges of $390,800. Machine hours were 287 hours for 1768B and 647 hours for 1819C. Direct materials issued for 1768B amounted to $229,000, and for 1819C they amounted to $420,200. 905,000 Total charges to the Manufacturing Overhead Control account for the year were $902,500, and direct labour charges made to all jobs amounted to $1,582,600, representing 247,800 direct labour hours. There were no beginning inventories. In addition to…
A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950
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.
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 Developing 3,000 2,000 $30,000 Maintenance Personnel Machine-hours 1,000 1,000 Labor-hours 500 500 Department direct costs $13,000 $37,750 $48,400 University Printers estimates that the variable costs in the Personnel Department total $19,000 and in the Maintenance Department variable costs total $8,500. Avoidable fixed costs in the Personnel Department are $6,600. Required: If University Printers outsources the Personnel Department functions, what is the maximum it can pay an outside vendor without increasing total costs? (Do not round intermediate calculations.) Maximum Amount
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 1,000 1,000 3,000 2,000 $10,000 Labor-hours. 500 500 Department direct costs. $5,000 $12,000 $15,000 Required Use the direct method to allocate these service department costs to the operating departments.