10 Exercise 11-39 (Algo) Reciprocal Cost Allocation-Outsourcing aService Department (LO 11-4, 5)Caro Manufacturing has two production departments, Machining and Assembly, and twoservice departments, Maintenance and Cafeteria. Direct costs for each department andthe proportion of service costs used by the various departments for the month of Augustfollow:DepartmentMachiningAssemblyMaintenanceCafeteriaDirectCosts$160,00060,00035,00032,500Maximum AmountProportion of Services Used byMaintenance Cafeteria Machining Assembly0.80.20.50.10.30.1Caro estimates that the variable costs in the Maintenance Department total $11,000, andin the Cafeteria variable costs total $18,000. Avoidable fixed costs in the MaintenanceDepartment are $8,000.Required:If Caro outsources the Maintenance Department, what is the maximum it can pay anoutside vendor without increasing total costs? (Do not round intermediatecalculations.)

Variable cost A variable cost is an expense for a business that varies according to how much is…

Answered: If Caro outsources the Maintenance…

If Caro outsources the Maintenance Department, what is the maximum it can pay an outside vendor without increasing total costs? (Do not round intermediate calculations.)

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 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...

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Exercise 11-37 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-1, 2) Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Department Fabricating Finishing Repair Quality Control Direct Costs $ 135,600 100,200 42,900 80,100 Maximum Amount Proportion of Services Used by Quality Control Repair 0 0.3 0.3 0 Fabricating Finishing 0.6 0.1 0.1 0.6 Mack Precision Tool and Die estimates that the variable costs in the Repair Department total $15,225, and in Quality Control variable costs total $39,200. Avoidable fixed costs in the Repair Department are $12,400. Required: If Mack Precision Tool and Die outsources the Repair Department, what is the maximum it can pay an outside vendor without increasing total costs? Note: Do not round intermediate…
Exercise 11-30 (Algo) Cost Allocation: Reciprocal Method (LO 11-1) Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Department Fabricating Finishing Repair Quality Control Proportion of Services Used by Quality Direct Costs Repair Control Fabricating Finishing From: Service department costs Repair Quality control Total $ 149,600 112,200 48,300 158,410 $ $ 0 0.3 Required: Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts. Repair 48,300 $ 0.3 0 Cost Allocation To: Quality Control 0.6 0.1 Fabricating 158,410 $ 48,300 $ 158,410 $ 0.1 0.6 Finishing. of $ 0 $ 0
· Deavayded departments (S1 and S2) and two producing departments (P1 and P2). Department data for April were as follows: Company has two service si P27,000 S2 Overhead costs P18,000 Services provided to: si -0- 20% S2 10% -0- 50% 40% P1 30% P2 50% What is the total allocated service department cost to P2 if the company uses the reciprocal method of allocating its service department costs? P19,800 P21,949 P22,500 P23,051
- Deavayded departments (S1 and S2) and two producing departments (P1 and P2). Department data for April were as follows: Company has two service si P27,000 P18,000 S2 Overhead costs Services provided to: si S2 -0- 20% 10% -0- P1 50% 30% P2 40% 50% What is the total allocated service department cost to P2 if the company uses the reciprocal method of allocating its service department costs?
Exercise 11-32 (Algo) Cost Allocation: Reciprocal Method (LO 11-4) Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Proportion of Services Used by Department Direct Costs Maintenance Cafeteria Machining Assembly Machining $ 140,000 Assembly 80,000 Maintenance 47,000 — 0.2 0.5 0.3 Cafeteria 38,000 0.8 — 0.1 0.1 Required: Use the reciprocal method to allocate the service costs. (Matrix algebra is not required.) (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)
Sequential (Step) Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Support Departments Producing Departments HumanResources GeneralFactory Fabricating Assembly Direct costs $165,000 $380,000 $114,200 $90,000 Normal activity: Number of employees — 40 70 150 Square footage 1,800 — 5,500 13,200 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Calculate the allocation ratios (rounded to four significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded…
Allocating Service Department Costs: Allocation Basis Alternatives Weld-Rite Fabricators has two producing departments, P1 and P2, and one service department, S1. Estimated directed overhead costs per month are as follows: P1 $450,000 P2 750,000 $1 273,000 Other data follow: Numbers of employees Production capacity (units) Space occupied (square feet) Five-year average of $1's service output used P1 P2 150 50 100,000 60,000 5,000 15,000 65% 35% For each of the following allocation bases, determine the total estimated overhead cost for P1 and P2 after allocating 51 cost to the producing departments. 1. Based on number of employees $ P1 P2 $ 2. Production capacity in units 3. Space occupied 4. Five-year average of $1 service used 627,450✔ 845,550✔ 5. Estimated direct overhead costs
Problem 11-66 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-4, 5) Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Using Department Supplying Department Processing Administration Maintenance Direct cost Processing Administration 0 0 10% $86,000 Variable costs Fixed costs Total costs Avoidable fixed costs C. 50% 0 20% a. Processing Department b. Administration Department Maintenance Department $590,000 Maintenance 0 0 0 $256,000 Maximum Amount Branches 10% 60% 20% $4,400,000 The cost accountant at Great Eastern Credit Union estimates that the cost structures in its departments are as follows. Processing Administration Maintenance Branches $133,000 $1,800,000 $60,000 26,000 $153,000 437,000 123,000 2,600,000 $86,000 $256,000 $4,400,000 $590,000 $276,000 $ 8,000…
Management and Allocation Assignm... i) Saved Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Proportion of Services Used by Direct Costs $120,000 76,000 54,000 37,000 Maintenance Machining Assembly Department Machining Assembly Maintenance Cafeteria Cafeteria 0.6 0.2 0.2 0.1 0.2 0.7 Required: Use the step method to allocate the service costs, using the following: a. The order of allocation starts with Maintenance. b. The allocations are made in the reverse order (starting with Cafeteria). Complete this question by entering your answers in the tabs below. Required A Required B The order of allocation starts with Maintenance. (Negative amounts should be indicated by a minus sign. Do not round Intermediate calculations.) To Cafeteria Machining Assembly From Maintenance…
Exercise 11-33 (Algo) Cost Allocation: Direct Method (LO 11-1) Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT Accounting HR IT 8% 10% The direct costs of the service departments in the previous period were $91,750 for IT, $119,000 for Accounting, and $162,500 for HR. HR allocation Total costs allocated Accounting HR West East 81% 40% 20% 40% 0% 40% 60% 10% 60% 20% Required: Use the direct method to allocate the service department costs to the production departments. Note: Amounts to be deducted should be indicated by a minus sign. Do not round Intermediate calculations. Service department costs IT allocation Accounting allocation IT Accounting HR West East
Exercise 11-31 (Algo) Cost Allocation: Reciprocal Method, Two Service Departments (LO 11-1) Activity and selected costs for three production departments (Training, Independent, and Commercial) and two service departments (Accounting and Facilities) at DuBay Films for the past month follow: Supplying Department Accounting Facilities Direct cost From: Service department costs Accounting Facilities Total allocations Direct costs Total costs Accounting $ 0 0.20 $ 250,000 Required: Allocate service department costs to Training, Independent, and Commercial using the reciprocal method. What are the total costs of Training, Independent, and Commercial after this allocation? Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts. Accounting $ 0 $ Facilities 0.40 0 $ 214,500 0 $ Using Department Training 0.30 0.20 $ 390,000 Facilities 0 Cost Allocation To: Training $ 0 $ Independent…
Required information Exercise 11-25 & 11-26 (Algo) (LO 11-1) [The following information applies to the questions displayed below.] Mack Precision Tool and Die has two production departments, Fabricating and Finishing, and two service departments, Repair and Quality Control. Direct costs for each department and the proportion of service costs used by the various departments for the month of March follow: Department Fabricating Finishing Repair Quality Control Direct Costs $ 131,600 92,200 39,300 73,300 Repair 8 0.6 Proportion of Services Used by Quality Control Fabricating Finishing 0.2 0.5 0.2 0.3 0.2 Exercise 11-26 (Algo) Allocating Service Department Costs First to Production Departments and Then to Jobs (LO 11-1)