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 (Westand East). The usage data for each of the service departments for the previous period follow:ITAccountingHRIT8%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 allocationTotal costs allocatedAccounting HR West East81%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 costsIT allocationAccounting allocationITAccountingHRWestEast

Lets understand the basics.Service department cost can be allocated using,(1) Direct method(2) Step…

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 IT 0% 10% Accounting 0% 10% HR 20% ex IT West East 40% 40% 60% Accounting HR 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. 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. 40% 60% 20% Accounting HR West East

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 IT 0% 10% Accounting 0% 10% HR 20% ex IT West East 40% 40% 60% Accounting HR 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. 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. 40% 60% 20% Accounting HR West East

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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Refer to the data in Exercise 7.22. The company has decided to simplify its method of allocating support service costs by switching to the direct method. Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. (Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar.) 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
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Refer to the data in Exercise 7.22. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Allocate the costs of the support departments using the sequential method. (Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar.) 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Budget performance report for a cost center Sneed Industries Company sells vehicle parts to manufacturers of heavy construction equipment. The Crane Division is organized as a cost center. The budget for the Crane Division for the month ended August 31, 20Y6, is as follows (in thousands): During August, the costs incurred in the Crane Division were as follows: Instructions Prepare a budget performance report for the director of the Crane Division for the month of August.
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