HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: Actuarial Premium rating Advertising Sales Actuarial 20% To Premium Rating 80% From Actuarial Premium The direct operating costs of the departments (including both variable and fixed costs) are: $95.000 30.000 75.000 55.000 Advertising department Sales department Advertising 10% 20 Sales 10% 60 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the total costs of the advertising and sales departments after using the step method of allocation. Total Cost Allocated

HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: Actuarial Premium rating Advertising Sales Actuarial 20% To Premium Rating 80% From Actuarial Premium The direct operating costs of the departments (including both variable and fixed costs) are: $95.000 30.000 75.000 55.000 Advertising department Sales department Advertising 10% 20 Sales 10% 60 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the total costs of the advertising and sales departments after using the step method of allocation. Total Cost Allocated

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...

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HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: From Actuarial Premium To Actuarial Premium Rating 70 % Actuarial Premium rating Advertising Sales 20 % Advertising 15% 20 The direct operating costs of the departments (including both variable and fixed costs) are: $85,000 20,000 65,000 45,000 Sales 15% 60 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method or allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.
HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: Actuarial Premium rating Advertising Sales From Actuarial Premium The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial Premium Rating 80% 25% $ 87,000 22,000 67,000 47,000 Advertising department Sales department To Advertising Sales 15% 5% 15 Required 1 Required 2 Required 3 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation. Complete this question by entering your…
HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts (in percentages) to the other departments is shown in the following table: From Actuarial Premium To Premium Rating 70% Actuarial 20% The direct operating costs of the departments (including both variable and fixed costs) are: Actuarial $ 81,000 Premium rating Advertising Sales 16,000 61,000 41,000 Advertising sales, 15% 20 15% 60 Required: 1. Determine the total costs of the advertising and sales departments after using the direct method of allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.
HomeLife Life Insurance Company has two service departments (actuarial and premium rating) and two production departments (advertising and sales). The distribution of each service department's efforts in percentages) to the other departments is shown in the following table: From Actuarial Premium Actuarial 20% To Actuarial $80,000 Premium 15,000 rating Advertising 60,000 Sales 40,000 Premium Rating Advertising Sales 808 108 10% 20 60 The direct operating costs of the departments (including both variable and fixed costs) are: Required: 1. Determine the total costs of the advertising and sales departments after using the direct method or allocation. 2. Determine the total costs of the advertising and sales departments after using the step method of allocation. 3. Determine the total costs of the advertising and sales departments after using the reciprocal method of allocation.
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
Better Health Company has two service departments -actuarial and premium rating, and two operations departments - marketing and sales. The distribution of each service department's efforts to the other departments is shown below: FROM Actuarial Rating TO Actuarial 0% 25% Actuarial Premium Rating Marketing Sales Rating 40% 0% Marketing 20% 37.5% The direct operating costs of the departments (including both variable and fixed costs) were as follows: $ 70,000 $ 40,000 $ 70,000 $ 80,000 Sales 40% 37.5% The total cost accumulated in the marketing department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar; assume the actuarial department goes first): A. $114,000. B. $118,000. C. $142,000. D. $146,000. E. $151,000. DA onn.
Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Total Transactions 0 10% 60% $ 370,000 IT Using Department Operations 0 0 0 $ 790,000 Allocated to: Costs Operations Transactions 0 30% 0 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. Retail Retail $ 1,630,000 $ 3,830,000 0 70% 30% 10% Commercial 0 Commercial 30% 30% 30% $ 2,380,000
The Emergency Medical Services Company has two divisions that operate independently of one another. The financial data for the year 20X5 reported the following results: North South Sales $3,720,000 $3,220,000 Operating income 930,000 730,000 Taxable income 785,000 510,000 Investment 6,000,000 5,000,000 The company's desired rate of return is 10%. Income is defined as operating income. a. What are the respective return-on-investment ratios for the North and South divisions? Round ROI to the nearest whole percentage. North: Answer South: Answer b. What are the respective residual incomes of the North and South divisions? North: Answer South: Answer c. Which division has the better return on investment and which division has the better residual income figure? Return on investment: Answer Residual Income: Answer
Rongon Company manufactures twotypes of product. Selected information is given below:FantasyJoySelling price per unit$25$150Variable expenses per unit$15$35Number of units sold annually20,0005,000Fixed expenses total $480,800 per year. Required: i.Assuming the sales mix given above, do the following: a. Prepare a contribution format income statement showing both dollar and percent columns for each product and for the company as a whole. b. Compute the break-even point in dollars for the company as awhole and the margin of safety in both dollars and percent.ii.The company has developed a new product to be called Delight. Assume that the company could sell 10,000 units at $65each. The variable expenses would be $58each. The company’s fixed expenses would not change. a. Prepare another contribution format income statement, including sales of the Samoan Delight (sales of the other two products would not change). b. Compute the company’s new break-even point in dollars and the new margin…
The Emergency Medical Services Company has two divisions that operate independently of one another. The financial data for the year 20x5 reported the following results North South $4,440,000 $3,940,000 1,110,000 910,000 920,000 645,000 6,000,000 5,000,000 Sales Operating income Taxable income Investment The company's desired rate of return is 10%. Income is defined as operating income. a. What are the respective return-on-investment ratios for the North and South divisions? Round ROI to the nearest whole percentage. ROI North South b. What are the respective residual incomes of the North and South divisions? Residual income North S South S c. Which division has the better return on investment and which division has the better residual income figure? Return on investment i # Residual income
Indi Services Corporation, headquartered in Bengaluru, India, provides specialized information technology (IT) services and consists of three divisions: (1) financial services, (2) health services, and (3) transportation services. For 2019, it recorded the following data: Sales revenues Variable costs (% of sales) Traceable fixed costs Financial Services $3,931,000 2,136,000 27% Health Services $5,269,000 2,697,000 39% Transportation Services $1,952,000 721,400 Total $11,152,000 44% Common fixed costs 5,554,400 1,180,000 Required: 1. Prepare a segment performance report showing the segment margin in dollars and percentages for all three divisions. Use Exhibit 12-3 as a guide. (Round "Percentage" answers to 2 decimal places.) INDI SERVICES CORPORATION Segment Performance Report Profit Centres Financial Services Health Services Transportation Services Total Company % % %
Okabee Enterprises is the distributor for two products, Model A100 and Model B900. Monthly sales and the contribution margin ratios for the two products follow: Product Model A100 Model B900 TotalSales . . . . . . . . . . . . . . . . . . . . . . . . $700,000 $300,000 $1,000,000Contribution margin ratio . . . . . . . . . 60% 70% ? The company’s fixed expenses total $598,500 per month. Required: 1. Prepare a contribution format income statement for the company as a whole. 2. Compute the break-even point for the company based on the current sales mix. 3. If sales increase by $50,000 per month, by how much would you expect net operating income to increase? What are your assumptions?