Salvador Apparel Company in Barcelona, Spain, has three production departments and two service departments. The overhead-per-month analysis sheet provides the following totals of the overheads analyzed to production and service departments:                           Departments                                           Overheads Men’s wear production department                         € 48,000 Women’s wear production department                                 42,000 Children’s wear production department                                30,000 Marketing service department                                               14,040 Delivery service department                                 18,000 €152,040   The expenses of the service departments are apportioned as follows:   Production departments    Service departments Men’s Women’s  Children’s   Marketing  Delivery Marketing     20%      40%       30%         —      10% Delivery       40%      20%       20%         20%     —   Instruction   Use following methods to allocate service departments’ costs:   Direct allocation (20%) Step-down allocation (30%) Reciprocal allocation (50%)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question

Salvador Apparel Company in Barcelona, Spain, has three production departments and two service departments. The overhead-per-month analysis sheet provides the following totals of the overheads analyzed to production and service departments:

 

                        Departments                                           Overheads

Men’s wear production department                         € 48,000

Women’s wear production department                                 42,000

Children’s wear production department                                30,000

Marketing service department                                               14,040

Delivery service department                                 18,000

€152,040

 

The expenses of the service departments are apportioned as follows:

 

Production departments    Service departments

Men’s Women’s  Children’s   Marketing  Delivery

Marketing     20%      40%       30%         —      10%

Delivery       40%      20%       20%         20%     —

 

Instruction

 

Use following methods to allocate service departments’ costs:

 

  1. Direct allocation (20%)
  2. Step-down allocation (30%)
  3. Reciprocal allocation (50%)
Expert Solution
steps

Step by step

Solved in 3 steps with 5 images

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education