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Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and Inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Total Labor Hours Used by Departments Sourcing Operations Sourcing 10,000 Operations 20,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Finishing Total Departmental Costs $192,000 250,000 428,000 273,000 $1.143,000 Assembly 40,000 60,000 Finishing 60,000 50,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method. (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Answer is complete but not entirely correct. Total Service Department Total Production Cost Cost Allocated Direct Method Assembly Finishing Step Method S 213,164 S 641,164 228,836 501,836 Assembly 217,818 645,818 Finishing 224,182 497,182 C Reciprocal Method Assembly 213,859 641,859 Finishing 230.873 503.873

Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and Inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Total Labor Hours Used by Departments Sourcing Operations Sourcing 10,000 Operations 20,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Finishing Total Departmental Costs $192,000 250,000 428,000 273,000 $1.143,000 Assembly 40,000 60,000 Finishing 60,000 50,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method. (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Answer is complete but not entirely correct. Total Service Department Total Production Cost Cost Allocated Direct Method Assembly Finishing Step Method S 213,164 S 641,164 228,836 501,836 Assembly 217,818 645,818 Finishing 224,182 497,182 C Reciprocal Method Assembly 213,859 641,859 Finishing 230.873 503.873

Financial And Managerial Accounting
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 5E: Crystal Scarves Co. produces winter scarves. The scarves are produced in the Cutting and Sewing...
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Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and Inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Total Labor Hours Used by Departments Sourcing Operations Sourcing 10,000 Operations 20,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Finishing Total Departmental Costs $ 192,000 250,000 428,000 273.000 $1.143.000 Assembly 40,000 60,000 Finishing 60,000 50,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Answer is complete but not entirely correct. Total Service Department Cost Allocated Total Production Cost a. Direct Method Assembly S 213,164 S 641,164 Finishing 228,836 501,836 b. Step Method Assembly 217,818 645,818 Finishing 224,182 497,182 C Reciprocal Method Assembly 213,859 641,859 Finishing 230,873 503,873
Transcribed Image Text:Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and Inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Total Labor Hours Used by Departments Sourcing Operations Sourcing 10,000 Operations 20,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Finishing Total Departmental Costs $ 192,000 250,000 428,000 273.000 $1.143.000 Assembly 40,000 60,000 Finishing 60,000 50,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Answer is complete but not entirely correct. Total Service Department Cost Allocated Total Production Cost a. Direct Method Assembly S 213,164 S 641,164 Finishing 228,836 501,836 b. Step Method Assembly 217,818 645,818 Finishing 224,182 497,182 C Reciprocal Method Assembly 213,859 641,859 Finishing 230,873 503,873
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