eBookShow Me HowSupport department cost allocation-reciprocal services methodDavis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costsfrom the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about eachdepartment is provided in the following table:Machine hoursAsset valueDepartment costMaintenanceDepartmentSecurityDepartmentCuttingDepartmentSewingDepartment8002,0008,4009,600$2,000$29,520$1,430$13,120$3,000$67,000$5,000$78,000Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method.SewingDepartmentCuttingDepartment<Production departments' total costs83,976 X117,184 XFeedbackCheck My WorkThe reciprocal services method considers all inter-support-department service, and thus is the most accurate of the three support department allocation methods. Theproportional usage of each support department's cost driver by the other departments to which its costs are to be allocated must be determined. Then, the supportdepartment costs are allocated simultaneously among the departments.

The indirect costs comprises the costs that are not directly related to the production. The cists…

Support department cost allocation-reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Machine hours Asset value Department cost Maintenance Department Security Department 800 2,000 $2,000 $29,520 $1,430 $13,120 Cutting Department Sewing Department 11 8,400 $3,000 $67,000 9,600 $5,000 $78,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Department Sewing Department Production departments' total costs 83,976 X 117,184 X Feedback

Support department cost allocation-reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Machine hours Asset value Department cost Maintenance Department Security Department 800 2,000 $2,000 $29,520 $1,430 $13,120 Cutting Department Sewing Department 11 8,400 $3,000 $67,000 9,600 $5,000 $78,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Department Sewing Department Production departments' total costs 83,976 X 117,184 X Feedback

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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ervices Method Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Security departments support the production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security Department are allocated based on asset value. Relevant department information is provided in the following table: Janitorial Security Molding Assembly Department Department Department Department Square feet 610 800 800 6,400 Asset value $120 $140 $880 $1,000' Department cost $2,100 $1,300 $10,900 $12,500 Using the reciprocal services method of support department cost allocation, determine: a. The percentage of Janitorial costs that should be allocated to the Security Department. % b. The percentage of Security costs that should be allocated to the Janitorial Department.
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Support Department Cost Allocation—Reciprocal Services Method Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $248,000. The total cost of the Cafeteria Department is $333,000. The number of employees and the square footage in each department are as follows: Employees Square Feet Security Department 10 570 Cafeteria Department 28 2,400 Laser Department 40 2,400 Forming Department 50 3,200 Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and…
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