Maintenance Security Department Cutting Department Sewing Department Department Machine hours 10,800 $5,500 800 2,000 $1,670 $16,000 7,200 $2,500 $64,000 Asset value $2,000 $36,000 Department cost $82,000
Maintenance Security Department Cutting Department Sewing Department Department Machine hours 10,800 $5,500 800 2,000 $1,670 $16,000 7,200 $2,500 $64,000 Asset value $2,000 $36,000 Department cost $82,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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:
Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method.
Transcribed Image Text:Maintenance
Security
Department
Cutting
Department
Sewing
Department
Department
Machine hours
10,800
$5,500
800
2,000
$1,670
$16,000
7,200
$2,500
$64,000
Asset value
$2,000
$36,000
Department cost
$82,000
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