Question
In: Accounting
Allocation: Fixed and Variable Costs, Budgeted Fixed and Variable Costs Biotechtron, Inc., has two research laboratories...
Allocation: Fixed and Variable Costs, Budgeted Fixed and Variable Costs
Biotechtron, Inc., has two research laboratories in the Southwest, one in Yuma, Arizona, and the other in Bernalillo, New Mexico. The owner of Biotechtron centralized the legal services function in the Yuma office and had both laboratories send any legal questions or issues to the Yuma office. The legal services support center has budgeted fixed costs of $175,000 per year and a budgeted variable rate of $66 per hour of professional time. The normal usage of the legal services center is 2,925 hours per year for the Yuma office and 1,575 hours per year for the Bernalillo office. This corresponds to the expected usage for the coming year.
Required:
1. Determine the amount of legal services support center costs that should be assigned to each office. In your computations, carry ratio values out to two decimal places. Round your final answers to the nearest dollar if rounding is required.
2. Since the offices produce services, not tangible products, what purpose is served by allocating the budgeted costs?
3. Now, assume that during the year, the legal services center incurred actual fixed costs of $178,300 and actual variable costs of $254,740. It delivered 3,840 hours of professional time—2,270 hours to Yuma and 1,570 hours to Bernalillo.
Determine the amount of the legal services center's costs that should be allocated to each office.
Solutions
Expert Solution
Part-a
| Computation of Amount of Legal Service Support Centre Cost to Each office | ||||
|
No. of Hour (A) |
Fixed cost (B=AX$38.89)) |
Variable cost (C=AX $66) ) |
Allocated Cost (B+C) |
|
| Yuma | 2925 | $113,753.25 | $193,050.00 | $306,803 |
| Bernalillo | 1575 | $61,251.75 | $103,950.00 | $165,202 |
part-b:-
It Serves the same purpose as costing out tangible Product
Part-c
| Computation of Amount of Legal Service Support Centre Cost to Each office | ||||
|
No. of Hour (A) |
Fixed cost (B=AX$46.43)) |
Variable cost (C=AX $66.34) ) |
Allocated Cost (B+C) |
|
| Yuma | 2270 | $105,396.10 | $150,591.80 | $255,988 |
| Bernalillo | 1570 | $72,895.10 | $104,153.80 | $177,049 |
Working Note:-
| Computation of Predetrmine Overhead Rate= Total Fixed Cost/ Total No. of Activity |
| (175000/(2925+1575 Hour)= $38.89/ Hour |
| Computation of Actual Fixed Overhead Rate= Total Fixed Cost/ Total No. of Activity |
| ($178300/3840= $46.43 |
| Computation of Actual Variable Overhead Rate= Total Variable Cost/ Total No. of Activity |
| $254740/3840= $66.34 |
ekkarill92 answered 2 weeks agoRelated Solutions
Part 3 USB Inc. predicted 2018 variable and fixed costs are as follows: Company budgeted for:...
Part 3
USB Inc. predicted 2018 variable and fixed costs are as
follows:
Company budgeted for:
43,200
Units
Variable costs
Fixed costs
Manufacturing
734,400
172,800
Selling and Administrative
216,000
60,500
Total
950,400
233,300
USB Inc. produces a wide variety of computer interface devices.
Per unit
manufacturing cost information about one of these products, a
high-capacity flash drive is as follows:
Direct material
$6
Direct labor
8
Variable Manufacturing Overhead
3
Fixed Manufacturing Overhead -allocated per unit
4
Total manufacturing costs...
Part 4 USB Inc. predicted 2018 variable and fixed costs are as follows: Company budgeted for:...
Part 4
USB Inc. predicted 2018 variable and fixed costs are as
follows:
Company budgeted for:
43,200
Units
Variable costs
Fixed costs
Manufacturing
734,400
172,800
Selling and Administrative
216,000
60,500
Total
950,400
233,300
USB Inc. produces a wide variety of computer interface devices.
Per unit
manufacturing cost information about one of these products, a
high-capacity flash drive is as follows:
Direct material
$6
Direct labor
8
Variable Manufacturing Overhead
3
Fixed Manufacturing Overhead -allocated per unit
4
Total manufacturing costs...
A company’s budgeted costs for 60,000 units are as follows: Fixed manufacturing costs $30,000 Variable manufacturing...
A company’s budgeted costs for 60,000 units are as
follows:
Fixed manufacturing costs
$30,000
Variable manufacturing costs
$15.00 per unit
The company produced 50,000 units.
How much is the flexible budget total manufacturing cost?
Welshpool Engineering has two production departments and two support departments. Budgeted data for the year follow. The company does not separate fixed and variable costs.
Welshpool Engineering has two production departments and two support departments. Budgeted data for the year follow. The company does not separate fixed and variable costs.
Support Departments
Production Departments
Maintenance
Power
Drilling
Assembly
Overhead costs
$160,000
$200,000
$81,500
$45,000
Machine hours
-
11,250
15,000
3,750
Kilowatt-hours
20,000
5,000
18,000
162,000
The maintenance department costs are allocated based on machine hours and power department costs are allocated based on kilowatt hours.
Required:
Determine the total overhead costs for...
definition for “Variable Costs”, “Fixed Costs”, mention and explain “Two Subcategories of Variable Costs”, and mention...
definition for “Variable Costs”, “Fixed Costs”, mention and
explain “Two Subcategories of Variable Costs”, and mention some
examples of “Fixed Costs”
Fixed and Variable Cost Allocation Kumar, Inc., evaluates managers of producing departments on their ability to...
Fixed and Variable Cost Allocation Kumar, Inc., evaluates
managers of producing departments on their ability to control
costs. In addition to the costs directly traceable to their
departments, each production manager is held responsible for a
share of the costs of a support center, the Human Resources (HR)
Department. The total costs of HR are allocated on the basis of
actual direct labor hours used. The total costs of HR and the
actual direct labor hours worked by each producing...
Fixed and Variable Cost Allocation Kumar, Inc., evaluates managers of producing departments on their ability to...
Fixed and Variable Cost Allocation
Kumar, Inc., evaluates managers of producing departments on
their ability to control costs. In addition to the costs directly
traceable to their departments, each production manager is held
responsible for a share of the costs of a support center, the Human
Resources (HR) Department. The total costs of HR are allocated on
the basis of actual direct labor hours used. The total costs of HR
and the actual direct labor hours worked by each producing...
Direct Materials, Direct Labor, and Reports budgeted and actual costs for variable and fixed factory overhead...
Direct Materials, Direct Labor, and Reports budgeted and actual
costs for variable and fixed factory overhead along with the
related controllable and volume variances.Factory Overhead Cost
Variance Analysis
Mackinaw Inc. processes a base chemical into plastic. A detailed
estimate of what a product should cost.Standard costs and actual
costs for direct materials, direct labor, and factory overhead
incurred for the manufacture of 7,200 units of product were as
follows:
Standard Costs
Actual Costs
Direct materials
9,400 lb. at $5.20
9,300...
ABC Corp. The company has fixed costs of $300,000. Total costs, both fixed and variable, are...
ABC Corp. The company has fixed costs of $300,000. Total costs,
both fixed and variable, are $378,000 when 40,000 units are
produced. How much is the variable cost per unit? (Please round to
the nearest cent.)
The following information pertains to the ABC Corporation:
Total Units for information given
7000
Fixed Cost per Unit
$200
Selling Price per Unit
$325
Variable Costs per Unit
$225
Target Operating Income
$100,000
How many units need to be sold in order to reach...
What is the difference between fixed costs and variable costs?’ Are there fixed costs in the...
What is the difference between fixed costs and variable
costs?’
Are there fixed costs in the long run? Explain
briefly.
Are fixed costs also sunk costs? Explain.
What are diminishing marginal returns as they relate to
costs?
Which costs are measured on a per-unit basis: fixed
costs, average cost, the average variable cost, variable costs, and
marginal cost?
How is each of the following calculated: marginal cost,
average total cost, average variable cost?
What shapes would you generally expect each...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Write a C++ program that reads integers from standard input until end of file. Print out...
- Woo Audio is a small company in New York that makes high-quality headphone amplifiers. The company...
- How are users categorized? In Linux, which user has all the privileges? Why do we need...
- Force Table: If the center ring were to have considerable mass, what effect would it have...
- 1. Mark Welsch deposits $7,100 in an account that earns interest at an annual rate of...
- Can someone please explain to me what are the differences between Windows and Linux memory hierarchy,...
- Research a company that has had some consolidation with a foreign subsidiary and discuss whether that...
ADVERTISEMENT