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 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 $58,400. The Payroll Department's equipment would be transferred to other departments within the company to replace outdated equipment that would be recycled for zero salvage value. Required: What is the financial advantage (disadvantage) of outsourcing the Payroll Department?

1. FAN Company has the following data for the year 2021 (in thousand) January 1, 2021 December 31, 2021 Raw Materials Inventory $16,300 $15,000 Work-in-process Inventory $40,000 $40,110 Finished Goods Inventory $49,600 $44,256 During 2021 the amount of raw material purchased was $21,700 and direct labor costs incurred were $10,100. The finance department also provides the following additional data : Factory Machinery Rent $ 1,840 Indirect Materials $ 3,400 Delivery Expense $ 760 Factory Utilities $4 1,200 Depreciation on Factory Building $ 3,500 Sales Commissions $ 340 Administrative Expense $ 1,620 Factory Insurance $ 1,266 Sales Revenue $ 98,600 Factory Manager's Salary $ 2,240 Indirect Labor $ 5,670 Instructions: c. Assume that FAN Company's accounting records show the balance of the following current asset accounts on December 31, 2021 (in thousand): Cash $110,250 Accounts Receivable $ 12,440 Prepaid Expenses $9,250 Supplies $ 500 Short-Term Investment $ 550 Prepare the current…

Sterling Archer Spy Agency provides independent intelligence gathering services. The agency has the following data concerning its overhead costs and its activity-based costing system: Overhead costs: Wages and salaries                   $400,000 Administrative expenses             150,000 Total                                           $550,000   Distribution of resource consumption:                                                                                     Activity Cost Pools                                                    Intelligence                          Report                                                  procurement                                                      Writeups                             Other                  Total Wages and salaries                          70%                                 25%                                                           5%                                             100% Administrative expenses…

Bob Randall, cost accounting manager for Hemple Products, was asked to determine the costs of the activities performed within the company’s Manufacturing Engineering Department. The department has the following activities: creating bills of materials (BOMs), studying manufacturing capabilities, improving manufacturing process, training, employees, and designing tools. The general ledger accounts reveal the following expenditures for Manufacturing Engineering:                                  Salaries                          $ 500,000                                  Equipment                       100,000                                  Supplies                            30,000                                      Total                            $630,000   The equipment is used for two activities: improving process and designing tools. The equipment’s time is divided by two activities: 40 percent for improving process and 60 percent for designing tools. The salaries are for nine…

Webster Company provides the following ABC costing information:   Activities Total Costs Activity-cost drivers Account inquiry hours $250,000 10,000 hours Account billing lines $125,000 5,000,000 lines Account verification accounts   $50,000 50,000 accounts Correspondence letters $ 25,000 5,000 letters Total costs $450,000     The above activities are used by Departments A and B as follows:   Department A Department B Account inquiry hours 1,000 hours 3,000 hours Account billing lines 200,000 lines 300,000 lines Account verification accounts 10,000 accounts 8,000 accounts Correspondence letters 1,000 letters 1,500 letters How much of the account inquiry cost will be assigned to Department A?   Group of answer choices   $5,000   $250,000   $75,000   $25,000

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Tasman Products has a Maintenance Department that services equipment in the company's Forming Department and Assembly Department. The cost of this servicing is charged to the operating departments based on machine-hours. Data for the Maintenance Department follow: Variable costs for lubricants Fixed costs for salaries and other Budget $ 261,000* Actual $ 215,000 $ 333,300 $ 231,500 *Budgeted at $18 per machine-hour. Data for the Forming and Assembly Departments follow: Percentage of Peak- Forming Department Assembly Department Total Machine-Hours Period Capacity Required Budget Actual 74% 9,700 11,700 26% 100% 4,800 3,800 14,500 15,500 The amount of fixed costs in the Maintenance Department is determined by peak-period requirements. Required: 1. How much Maintenance Department cost should be charged to the Forming Department and to the Assembly Department? 2. How much, if any, of the Maintenance Department's actual costs should be treated as a spending variance and not charged to the…

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…

Within the costing system of Asempa manufacturing company the following types of expense are incurred.                                                                                                 GHȼCost of oils used to lubricate production machinery             20,000Motor vehicle licences for lorries                                           50,000Depreciation of factory plant and equipment                        40,000Cost of chemicals used in the laboratory                               10,000Commission paid to sales representatives                              25,000Salary of the secretary to the finance director                        22,000Trade discount given to customers                                         12,000Holiday pay of machine operatives                                         32,000Salary of security guard in raw material warehouse                15,000Fees to advertising agency                                                       8,000Rent of finished goods…

Lily Accounting performs two types of services, Audit and Tax. Lily's estimated overhead costs consist of computer support, $312000; and legal support, $153000. Information on the two services and their estimated use of cost drivers is as follows: Direct labor cost CPU minutes Legal hours used Audit Tax $50000 $100000 O $3744 O $5097 O $5544 O $3897 40000 200 10000 800 Lily Accounting performs tax services for Cathy Lane. Direct labor cost is $1200, 600 CPU minutes were used; and 1 legal hour was used. What is the total cost of the Lane job using ABC?