Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 5, Problem 1CMA
To determine
Identify the number of hours the
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Prism Company has two service departments: security departments and maintenance departments that give services to two producing departments: machining department and assembling department. Security department costs will be allocated using the number of employees and maintenance department costs will be allocated using direct labor hours. For calculation of predetermined rate, machine hours and direct labor hours are used for machining and assembling departments, respectively.
Highland Publishing Company is a large organization offering a variety of printing and binding work. The Printing and Binding departments are supported by three service departments. The costs of these service departments are allocated to other departments in the order listed below. The Personnel cost is allocated based on number of employees. The Custodial Services cost is allocated based on square feet of space occupied and the Maintenance cost is allocated based on machine-hours.
Department
Total Labor-Hours
Square Feet of Space Occupied
Number of Employees
Machine-Hours
Direct Labor-Hours
Personnel
16,400
12,600
27
Custodial Services
8,600
3,900
49
Maintenance
14,300
10,200
65
Printing
30,600
40,300
109
162,000
13,000
Binding
101,000
21,000
307
41,000
80,000
170,900
88,000
557
203,000
93,000
Budgeted overhead costs in each department for the current year are shown below:
Personnel
$ 320,000
Custodial Services
65,300
Maintenance
93,300…
The Woodridge Manufacturing Company has two Production Departments: Cutting and Pasting. Each of these two departments uses the services provided by the Computing and Maintenance Departments, which both support the production functions and each other’s functions as well. Woodridge uses the step method of allocating these service department costs to the production departments. Computing is allocated on the basis of hours of department operations and Maintenance is allocated on the basis of departmental direct labor hours. Last period the following costs were recorded:
Cutting Department overhead
$400,000
Pasting Department overhead
$600,000
Computing Department total costs
$700,000
Maintenance Department total costs
$300,000
Production Department data:
Cutting
Pasting
Computing
Maintenance
Hours of operation
5,000
7,500
15,000
2,500
Direct labor hours recorded
4,000
8,000
4,000
8,000
Required:
a. Determine the…
Chapter 5 Solutions
Managerial Accounting
Ch. 5 - Why are support department costs difficult to...Ch. 5 - Why does support department cost allocation matter...Ch. 5 - What are some drawbacks of applying support...Ch. 5 - Why is the diect method of support department cost...Ch. 5 - How does management determine the order in which...Ch. 5 - Are large or small companies more likely to use...Ch. 5 - What is the main difference between the physical...Ch. 5 - When would management most likely use the net...Ch. 5 - What are the two most often used ways of...Ch. 5 - How can support department and joint cost...
Ch. 5 - Charlies Wood Works produces wood products (e.g.,...Ch. 5 - Bucknum Boys, Inc., produces hunting gear for buck...Ch. 5 - Prob. 3BECh. 5 - Blakes Blacksmith Co. produces two types of...Ch. 5 - Garys Grooves Co. produces two types of carving...Ch. 5 - Prob. 6BECh. 5 - Yo-Down Inc. produces yogurt. Information related...Ch. 5 - Prob. 2ECh. 5 - Blue Africa Inc. produces laptops and desktop...Ch. 5 - Christmas Timber, Inc., produces Christmas trees....Ch. 5 - Crystal Scarves Co. produces winter scarves. The...Ch. 5 - Davis Snowflake Co. produces Christmas stockings...Ch. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Support department cost allocation comparison...Ch. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Joint cost allocation market value at split-off...Ch. 5 - Joint cost allocation net realizable value method...Ch. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Joint cost allocation-market value at split-off...Ch. 5 - Joint cost allocation net realizable value method...Ch. 5 - Support department cost allocation Blue Mountain...Ch. 5 - Support activity cost allocation Jakes Gems mines...Ch. 5 - Joint cost allocation Lovely Lotion Inc. produces...Ch. 5 - Joint cost allocation Florissas Flowers jointly...Ch. 5 - Support department cost allocation Hooligan...Ch. 5 - Support activity cost allocation Kizzles Crepes...Ch. 5 - Joint cost allocation McKenzies Soap Sensations,...Ch. 5 - Prob. 4PBCh. 5 - Analyze Milkrageous, Inc. Milkragcous, Inc., a...Ch. 5 - Analyze Horsepower Hookup, Inc. Horsepower Hookup,...Ch. 5 - Prob. 3MADCh. 5 - Prob. 4MADCh. 5 - Joint cost allocation and performance evaluation...Ch. 5 - Prob. 3TIFCh. 5 - Prob. 1CMACh. 5 - Adam Corporation manufactures computer tables and...Ch. 5 - Breegle Company produces three products (B-40,...Ch. 5 - Tucariz Company processes Duo into two joint...
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- A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.arrow_forwardLansing. Inc., provided the following data for its two producing departments: Machine hours are used to assign the overhead of the Molding Department, and direct labor hours are used to assign the overhead of the Polishing Department. There are 30,000 units of Form A produced and sold and 50,000 of Form B. Required: 1. Calculate the overhead rates for each department. 2. Using departmental rates, assign overhead to live two products and calculate the overhead cost per unit. How does this compare with the plantwide rate unit cost, using direct labor hours? 3. What if the machine hours in Molding were 1,200 for Form A and 3,800 for Form B and the direct labor hours used in Polishing were 5,000 and 15,000, respectively? Calculate the overhead cost per unit for each product using departmental rates, and compare with the plantwide rate unit costs calculated in Requirement 2. What can you conclude from this outcome?arrow_forwardAnnapolis Company has two service departments (Computer Operations & Maintenance Services). Annapolis has two production departments (Mixing Department & Packaging Department.) Annapolis uses a step allocation method where the Computer Operations Department is allocated to all departments and Maintenance Services is allocated to the production departments. All allocations are based on total employees. Computer Operations has costs of $110,000 and Maintenance Services has costs of $110,000 before any allocations. What amount of Maintenance Services total cost is allocated to the Mixing Department? (round to closest whole dollar) Employees are: Computer Operations 4 Maintenance Services 2 Mixing Department 8 Packaging Department 6 2.Adelphi Company provides the following information for their first year of operations in 2018: Sales, 10,000 units @ $15 each Total production, 11,000 units…arrow_forward
- Deedee Tech Sdn Bhd (DTSB) involves in the production of computer appliances. There are two producing departments in DTSB: assembly, and quality control. For the purpose of overhead allocation, the assembly department applies machine hours, while quality control department uses direct labour hours. However, if the plant-wide rate is applied, DTSB would use machine hours for the cost driver. The information below is related to the overhead costs of DTSB for the year 2021: Assembly Quality Control Total Estimated overhead RM250,000 RM130,000 RM380,000 Estimated machine hour 21,000 hours 3,000 hours 24,000 hours Estimated direct labour hour 20,000 hours 80,000 hours REQUIRED: (a) Calculate the predetermined overhead rate using:…arrow_forwardThe Sunland Company makes wheels and wings for ground transport vehicles and drones. In addition to the key manufacturing departments, Sunland needs two key support services, provided by its Maintenance and IT departments. The Maintenance costs are allocated to other departments based on the square footage of space each department occupies. The IT department allocates its costs to other departments based on the amount of time the IT employees spend assisting the other departments. The cost information of all four departments, along with their usage information for both allocation bases, is as follows. Initial cost Square feet occupied IT labor hours used Support Departments Maintenance IT $136,000 $75,000 1,200 2,000 900 Operating Departments Wheels Wings $413,000 $702,000 2,400 2,565 5,600 1,935 Totals $1,326,000 11,200 5,400arrow_forwardMirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below: Processing $ 4,900 Supervising $ 34,200 Other $ 11,200 Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of batches. The costs in the Other activity cost pool are not assigned to products. Activity data appear below: MHs (Processing) Batches (Supervising) Product M0 13,300 900 Product M5 700 900 Total 14,000 1,800 Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins. Product M0 Product M5 Sales (total) $ 81,000 $ 93,900 Direct materials (total) $ 29,300 $ 32,200 Direct labor (total) $ 28,600 $ 42,500 What is the overhead cost assigned to Product…arrow_forward
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