Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $100,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $112,500 and $135,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Support Departments Production Departments Warehouse Data Center Music Вooks Department Department |Budgeted costs Budgeted warehouse-hours $350,000 $100,000 $112,500 $135,000 NA 560 1100 1580 Number of computer hours 270 NA 870 1070

Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $100,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $112,500 and $135,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Support Departments Production Departments Warehouse Data Center Music Вooks Department Department |Budgeted costs Budgeted warehouse-hours $350,000 $100,000 $112,500 $135,000 NA 560 1100 1580 Number of computer hours 270 NA 870 1070

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter19: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 2CMA: Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing...

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Friendly Bank is attempting to determine the cost behavior of its small business lending operations. One of the major activities is the application activity. Two possible activity drivers have been mentioned: application hours (number of hours to complete the application) and number of applications. The bank controller has accumulated the following data for the setup activity: Required: 1. Estimate a regression equation with application hours as the activity driver and the only independent variable. If the bank forecasts 2,600 application hours for the next month, what will be the budgeted application cost? 2. Estimate a regression equation with number of applications as the activity driver and the only independent variable. If the bank forecasts 80 applications for the next month, what will be the budgeted application cost? 3. Which of the two regression equations do you think does a better job of predicting application costs? Explain. 4. Run a multiple regression to determine the cost equation using both activity drivers. What are the budgeted application costs for 2,600 application hours and 80 applications?
Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing cost information for the next year: If Adam uses the step-down (sequential) method, beginning with the Maintenance Department, to allocate support department costs to production departments, the total overhead (rounded to the nearest dollar) for the Machining Department to allocate to its products would be: a. 407,500. b. 422,750. c. 442,053. d. 445,000.
Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?
Douglas Davis, controller for Marston, Inc., prepared the following budget for manufacturing costs at two different levels of activity for 20X1: During 20X1, Marston worked a total of 80,000 direct labor hours, used 250,000 machine hours, made 32,000 moves, and performed 120 batch inspections. The following actual costs were incurred: Marston applies overhead using rates based on direct labor hours, machine hours, number of moves, and number of batches. The second level of activity (the right column in the preceding table) is the practical level of activity (the available activity for resources acquired in advance of usage) and is used to compute predetermined overhead pool rates. Required: 1. Prepare a performance report for Marstons manufacturing costs in the current year. 2. Assume that one of the products produced by Marston is budgeted to use 10,000 direct labor hours, 15,000 machine hours, and 500 moves and will be produced in five batches. A total of 10,000 units will be produced during the year. Calculate the budgeted unit manufacturing cost. 3. One of Marstons managers said the following: Budgeting at the activity level makes a lot of sense. It really helps us manage costs better. But the previous budget really needs to provide more detailed information. For example, I know that the moving materials activity involves the use of forklifts and operators, and this information is lost when only the total cost of the activity for various levels of output is reported. We have four forklifts, each capable of providing 10,000 moves per year. We lease these forklifts for five years, at 10,000 per year. Furthermore, for our two shifts, we need up to eight operators if we run all four forklifts. Each operator is paid a salary of 30,000 per year. Also, I know that fuel costs about 0.25 per move. Assuming that these are the only three items, expand the detail of the flexible budget for moving materials to reveal the cost of these three resource items for 20,000 moves and 40,000 moves, respectively. Based on these comments, explain how this additional information can help Marston better manage its costs. (Especially consider how activity-based budgeting may provide useful information for non-value-added activities.)
Nozama.com Inc. sells consumer electronics over the Internet. For the next period, the budgeted cost of the sales order processing activity is 250,000 and 50,000 sales orders are estimated to be processed. a. Determine the activity rate of the sales order processing activity. b. Determine the amount of sales order processing cost associated with 30,000 sales orders.
Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $360,000 are allocated on the basis of budgeted warehouse - hours. Data Center Department costs of S180,000 are allocated based on the number of computer log - on hours. The costs of operating departments Music and Books are $135,000 and S162,000, respectively. Data on budgeted warehouse - hours and number f computer log - on hours are as follows: Support Departments Warehouse Department Production Departments Data Center Department Music Books Budgeted costs Budgeted warehouse - hours Number of computer hours $360,000 $180.000 $135,000 $162.000 NA 570 1,060 1,580 300 NA 830 1,100 Using the step - down method, what amount of Data Center Department cost will be allocated to the Warehouse Department if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up) O A. $62,945 O B. $0 OC. $24,215 O D. $180,000
Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $390,000 are allocated on the basis of budgeted warehouse - hours. Data Center Department costs of $100,000 are allocated based on the number of computer log - on hours. The costs of operating departments Music and Books are $122,500 and $147,000, respectively. Data on budgeted warehouse - hours and number of computer log - on hours are as follows: Support Departments Production Departments Warehouse Data Center Music Books Department $390,000 Department $100,000 Budgeted costs Budgeted warehouse - hours Number of computer hours $122,500 $147.000 NA 580 1,040 1,600 220 NA 810 1,010 Dr Using the step - down method, what amount of Data Center Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round intermediary calculations to three decimal places.) O A.…
Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $300,000 are allocated on the basis of budgeted warehouse - hours. Data Center Department costs of $120,000 are allocated based on the number of computer log - on hours. The costs of operating departments Music and Books are $105,000 and $126,000, respectively. Data on budgeted warehouse - hours and number of computer log - on hours are as follows: Support Departments Production Departments Warehouse Data Center Music Books Department $300,000 Department $120,000 Budgeted costs Budgeted warehouse - hours Number of computer hours $105,000 1,060 $126,000 NA 560 1,520 210 NA 860 1,100 Using the step - down method, what amount of Warehouse Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Do not round any intermediary calculations.) ..... O A. $35,446 O B.…
Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse - hours. Data Center Department costs of $100,000 are allocated based on the number of computer log - on hours. The costs of operating departments Music and Books are $112,500 and $135,000, respectively. Data on budgeted warehouse - hours and number of computer log - on hours are as follows: Support Departments Production Departments Warehouse Data Center Music Books Department $350,000 Department $100,000 Budgeted costs Budgeted warehouse - hours Number of computer hours $112.500 $135,000 1,530 NA 590 1,020 210 NA 850 1,040 prrect Using the step - down method, what amount of Data Center Department cost will be allocated to the Warehouse Department if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up) O A. $36,646 B. $10,000 C. $100,000 O D. $0
XYZ's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $280,000 are allocated based on budgeted warehouse-hours. Data Center Department costs of $80,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $90,000 and $108,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Budgeted costs Budgeted warehouse-hours O $122,500 Production Departments O $126,000 Number of computer hours 400 O $98,000 Warehouse Department O $98,000 $280,000 ΝΑ Data Center Department $80,000 500 ΝΑ Support Departments Music $90,000 1,125 900 Books Using the direct method, what amount of Warehouse Department costs will be allocated to Department Books? (Do not round any intermediary calculations.) $108,000 875 700
Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center Warehouse Department costs of $340,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $140,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $120,000 and $144,000, respectively Data on budgeted warehouse-hours and number of computer log-on hours are as follows Support Departments OA. $77.778 OB. $62,222 OC. $140,000 OD. $55.495 Production Departments Music Books Warehouse Department Data Center Department Budgeted costs $340,000 $140,000 $120,000 Budgeted warehouse-hours 510 1,020 NA 240 Number of computer hours NA 880 Using the direct method. what amount of Data Center Department costs will be allocated to Department Music (Do not round any intermediary calculations) $144,000 1,570 1,100
Betty's Book and Music Store has two service departments, Warehouse and Data Centre. Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours. Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $125,000 and $150,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Support Departments Production Departments Warehouse Department Data Centre Department Music Books Budgeted costs $175,000 $75,000 $125,000 $150,000 Budgeted warehouse-hours NA 250 500 750 Number of computer hours 100 NA 400 500 Required: Assign the support department costs to the production departments using: The Direct Method (3) The Step-Down Method assigning the Warehouse Department first (4) The Reciprocal Method using linear equations. (4)