Managerial Accounting
17th Edition
ISBN: 9781260247787
Author: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Publisher: RENT MCG
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Chapter 4.B, Problem 2E
EXERCISE 4B-2 Step-Down Method LO4-11
Madison Park Co-op. a whole foods grocery and gift shop, has provided the following data to be used in the service department cost allocations:
Service Departments Operating Departments
| Administration Janitorial | Groceries | Gifts | ||
| Departmental costs before allocations… | $150,000 |
$40,000 | $2,320,000 | $950,000 |
| Employee-hours | 320 |
160 | 3,100 | 740 |
| Space occupied-square feet | 250 |
100 | 4,000 | 1,000 |
Required:
Using the step-down method, allocate the costs of the service departments to the two operating departments Allocate Administration first on the basis of employee-hours and then Janitorial on the basis of space occupied.
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Students have asked these similar questions
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, Information
Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded:
Supplying
Department
Transactions
IT
Operations
Direct cost
IT
From:
Operations
Transactions
Transactions
Total
8
10%
70%
$ 310,000
IT
Using Department
Operations
Costs
Operations
S 250,000 $ 750,000
670,000 X
1,510,000 x
8
8
8
$ 730,000
Required:
a. Allocate the service department costs to the two operating departments using the reciprocal method.
Answer is complete but not entirely correct.
Allocated to:
Transactions
$ 250,000 $
2,233,333 x
8
30%
8
$ 1,570,000
$
Retail
Retail
0X $
0.x
0x
0
Commercial
S
$ 3,770,000
78%
30%
10%
833,333 X
0x
0x
833,333
Commercial
36%
38%
28%
$ 2, 320, 000
Pepper Depanment store aliocates ns service department espenses to s various operating sales) departments The folowing dats is avaitable for ts service departments
Expense
Dasts for allecation
ADunt
Rent
Square feet of flnor space
$47,000
47,000
62, 00
Advertising
Amount of dollar sales
Adainistrative
Number of enployees
The following information s aveitable for mu three opeating tuale departments
Number of
Department
Square Feet
5,400
8, 100
13,500
Dollar Seles
$ 302,000
$ 453, 00
S 755, 000
enployees
15
Totals
27,000
$3,510,000
What as the total expense allocated to Deparnment B
Mutiple Choice
$32.000
$42065
O s400
$42500
$40.000
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, Information
Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded:
Supplying
Department
Transactions
IT
Operations
Direct cost
IT
From:
Operations
Transactions
Transactions
Total
8
18%
70%
$ 310,000
IT
Costs
Operations
S 250,000 $ 750,000
670,000 x
1,510,000 x
Using Department
Operations
8
8
8
$
$ 730,000
Required:
a. Allocate the service department costs to the two operating departments using the reciprocal method.
x Answer is complete but not entirely correct.
Allocated to:
Transactions
250,000 XS
2,233,333 x
$
8
30%
8
$ 1,570,000 $ 3,770,000
Retail
0X
X $
Retail
OX
0x
0
Commercial
S
70%
30%
18%
833,333 X
0x
0 x
833,333
Commercial
30%
38%
28
$ 2,320,000
Chapter 4 Solutions
Managerial Accounting
Ch. 4.A - EXERCISE 4A-1 Computation of Equivalent Units of...Ch. 4.A - EXERCISE 4A-2 Cost per Equivalent Unit-FIFO Method...Ch. 4.A - EXERCISE 4A-3 Assigning Costs to Units-FIFO Method...Ch. 4.A - EXERCISE 4A-4 Cost Reconciliation Report-EIFO...Ch. 4.A - EXERCISE 4A-5 Computation of Equivalent Units of...Ch. 4.A - EXERCISE 4A-6 Equivalent Units of Production-FIFO...Ch. 4.A - EXERCISE 4A-7 Equivalent Units of Production and...Ch. 4.A -
EXERCISE 4A-8 Equivalent Units of Production—FIFO...Ch. 4.A - EXERCISE 4A-9 Equivalent Units; Equivalent Units...Ch. 4.A - PROBLEM 4A-10 Equivalent Units of Production;...
Ch. 4.A - Prob. 11PCh. 4.A - Prob. 12CCh. 4.B - Prob. 1ECh. 4.B - EXERCISE 4B-2 Step-Down Method LO4-11 Madison Park...Ch. 4.B - Prob. 3ECh. 4.B - EXERCISE 4B-4 Direct Method LO4-10 Refer to the...Ch. 4.B - PROBLEM 4B-5 Step-Down Method L04-11 Woodbury...Ch. 4.B - Prob. 6CCh. 4 - Prob. 1QCh. 4 - In what ways are job-order and process costing...Ch. 4 - Why is cost accumulation simpler in a process...Ch. 4 - How many Work in Process accounts are maintained...Ch. 4 - Prob. 5QCh. 4 - Prob. 6QCh. 4 - Prob. 7QCh. 4 - Prob. 8QCh. 4 - Prob. 1AECh. 4 - This exercise relates to the Double Diamond Skis’...Ch. 4 - This exercise relates to the Double Diamond Skis’...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 -
Clopack Company manufactures one product that...Ch. 4 -
Clopack Company manufactures one product that...Ch. 4 -
Clopack Company manufactures one product that...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Prob. 10F15Ch. 4 - Prob. 11F15Ch. 4 - Prob. 12F15Ch. 4 -
Clopack Company manufactures one product that...Ch. 4 - Prob. 14F15Ch. 4 - Prob. 15F15Ch. 4 - Prob. 1ECh. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - EXERCISE 4-4 Assigning Costs to...Ch. 4 - EXERCISE 4-5 Cost Reconciliation...Ch. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Prob. 8ECh. 4 -
EXERCISE 4-9 Equivalent Units and Cost per...Ch. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - PROBLEM 4-16 Comprehensive...Ch. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19CCh. 4 - (
CASE 4-20 Ethics and the Manager, Understanding...
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