Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1)Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, InformationTechnology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded:SupplyingDepartmentTransactionsITOperationsDirect costUsing DepartmentTransactionsITOperationsRetailCommercialӨӨ70%30%10%Ө20%30%40%50%ӨӨ10%40%$ 390,000$ 810,000$ 1,650,000$ 3,850,000$ 2,400,000Required:a. Allocate the service department costs to the two operating departments using the reciprocal method.From:CostsOperationsAllocated to:TransactionsRetailCommercialIT$810,000 $ 162,000 $ 81,000 $243,000 $ 324,000OperationsTransactionsTotal$243,000 $ 324,000

Operation Cost=Operation Direct Cost + 20% of IT=$ 1,650,000 + (810,000 * 0.2)=$…

Answered: Problem 11-60 (Algo) Cost Allocation:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information Exercise 9-35 and 9-36 (Algo) Skip to question The Personnel Department at Hernandez Bros. is centralized and provides services to the two operating units: Miami and New York. The Miami unit is the original unit of the company and is well established. The New York unit is new, much like a start-up company. The costs of the Personnel Department are allocated to each unit based on the number of employees in order to determine unit profitability. The current rate is $620 per employee. Data for the fiscal year just ended show the following. Miami New York Number of employees 1,320 420 Number of new hires 12 32 Number of employees departing 18 18 Exercise 9-35 (Algo) Unitwide versus Department Allocation-Administrative (Service) Function (LO 9-2, 3) Required: a. Compute the cost allocated to each unit using the current allocation system. b. Livan, the manager of the Miami unit, is unhappy with the allocation from Personnel. He…
2.)
Calculating ABC Unit Costs Perkins National Bank has collected the following information for four activities and two types of credit cards: Activity Driver Classic Gold Activity Rate ($) Processing transactions Transactions processed 12,000 7,200 0.20 Preparing statements Number of statements 12,000 7,200 0.95 Answering questions Number of calls 24,000 36,000 4.00 Providing ATMs ATM transactions 48,000 14,400 1.50 There are 5,000 holders of Classic cards and 21,000 holders of the Gold cards. Required: Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards. Unit cost for Classic $fill in the blank 1 Unit cost for Gold $fill in the blank 2
Part 2 – CVP Analysis The condensed income statement of the Happy Valley Inn is as follows" Variable Costs $1,800,000 1,250,000 200,000 $3,250,000 Fixed Costs Department Income $3,300,000 200,000 150,000 S3,650,000 900,000 1,400,000 1,350,000 472,500 Department Revenue S6,000,000 2,500,000 500,000 $9,000,000 Room $900,000 1,050,000 150,000 $2,100,000 Food and Bev Other Total Other Variable Other Fixed Costs Pre-Tax Income Tax Net Income 877,500 1) What is the contribution ratio for the Happy Valley Inn? 2) What is the break-even level of Sales for the Happy Valley Inn? 3) What level of sales are needed to earn $1,000,000 in net income? 4) What level of Room Sales are needed to earn S1,000,000 in net income? 5) What would be the projected net income at $10,000,000 in Sales?
Problem 1-18 (Algo) Direct and Indirect Costs; Variable Costs [LO1-1, LO1-4] The following cost data pertain to the operations of Montgomery Department Stores, Inc., for the month of July. Corporate legal office salaries. Apparel Department cost of sales-Evendale Store Corporate headquarters building lease Store manager's salary-Evendale Store Apparel Department sales commission-Evendale Store Store utilities-Evendale Store Apparel Department manager's salary-Evendale Store Central warehouse lease cost Janitorial costs-Evendale Store $ $ $ $ $ 1. Total direct costs for the Apparel Department 2 Total direct costs for the Evendale Store 3. Total direct costs for the Apparel Department that are also variable costs $ 64,800 101,500 75,600 15,000 8,450 14,900 8,550 20,900 11,000 The Evendale Store is just one of many stores owned and operated by the company. The Apparel Department is one of many departments at the Evendale Store. The central warehouse serves all of the company's stores.…
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Exercise 12-40 (Algo) Single versus Dual Rates (LO 12-5, 6) Kentfield Advisory Services (KAS) is a large management consulting firm organized into two groups: Governmental Services (GS) and Commercial Support (CS). Corporate information technology (IT) services support both groups. The cost of computer support is $48 million. The following information is given: Governmental Services Commercial Support Utilization 42% 58 Revenues (5000) $ 242,820 441,180 Required: What is the cost allocation if fixed IT costs of $37.4 million are allocated on the basis of utilization and the remaining costs (all variable) are allocated on the basis of group revenues? Note: Do not round intermediate calculations. Enter your answers in dollars, not in millions or thousands.
Cornerstone Exercise 7-31 Calculating ABC Unit Costs oqrmo gninobro9n ageaea Perry National Bank has collected the following information for four activities and two types of credit cards:en wallokae she aitkop 7pilnquao.bobbonsisbbdo bns noiteanol 2000 ei i bas 1251 orlu boliel oved aomoqmos srls to diod TO Activity Driver Classic Gold Activity Rate Processing transactions Preparing statements re e Number of statements Answering questions Exer Providing ATMS Transactions processed 8,000 e 8,000 viirio/4,800 16,000 32,000 4,800 $0.15 0.90 Number of calls 3.00 24,000 9,600 ATM transactions 1.20 There are 5,000 holders of Classic cards and 20,000 holders of the Gold cards. activities: Required: ese twoho tion molding Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards. The Cornerstone Exercise 7-32 Assigning Costs to Activities Baker Company produces small engines for lawnmower producers. The accounts payable depart- ment at Baker has six clerks who…

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