FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Snowy River Stallion Inc. produces horse and rancher equipment. Costs from Support Department 1 are allocated based on the number of employees. Costs from Support Department 2 are allocated based on asset value. Relevant department information is provided in the following table:
Using the sequential method of support department cost allocation, determine the total costs from Support Department 1 (assuming they are allocated first) that should be allocated to Support Department 2 and to each of the production departments.
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- Which one of the following is not a step in allocating the support department cost to the production department? Select one: a. Trace all the overhead cost b. Divide the departments in to support and producing departments c. Undertake a breakeven analysis d. Divide the company in departmentsarrow_forwarddevratarrow_forwardSuppose that manufacturing is performed in sequential production departments. Prepare a journalentry to show a transfer of partially completed units from the first department to the second department. Assume the amount of costs transferred is $50,000.arrow_forward
- A cost driver is used to allocate support department expenses. Match each of the following cost drivers with the appropriate department. Clear All Number of work orders Number of employees Number of payroll checks Number of purchase requisitions Payroll Accounting Maintenance President's Office Purchasing Human Resourcesarrow_forwardB 1.arrow_forwardanswer in text form please (without image)arrow_forward
- Part 1: Allocate the costs of the 3 service departments using the direct method. Part 2: Allocate the costs of the 3 service departments using the step method, with the order determined by the greater percentage usage. Part 3: Allocate the costs of the 3 service departments using the reciprical method. Part 4:What is one strength and one drawback of each of the methods?arrow_forwardSequential (Step) Method of Support Department Cost Allocation Chekov Company has two support departments, Human Resources and General Factory, and two producing departments, Fabricating and Assembly. Direct costs Normal activity: Number of employees Square footage Human Resources General Factory Direct costs Allocate: General Factory Support Departments Human Resources Human Resources Total after allocation $150,000 1,500 The costs of the Human Resources Department are allocated on the basis of number of employees, and the costs of General Factory are allocated on the basis of square footage. Now assume that Chekov Company uses the sequential method to allocate support department costs. The support departments are ranked in order of highest cost to lowest cost. Required: 1. Calculate the allocation ratios (rounded to six significant digits) for the four departments using the sequential method. If an amount is zero, enter "0". Use the rounded values for subsequent calculations. Human…arrow_forward
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