Question

In: Accounting

State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits...

State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the year ended December 31 follows.

Administration Communications Facilities Deposits Loans
Direct costs $ 220,000 $ 320,000 $ 252,000 $ 7,980,000 $ 4,900,000
Employee hours 21,500 36,000 23,500 490,000 319,000
Number of employees 8 16 5 220 180
Square footage occupied 5,000 14,200 5,400 242,700 201,800

  

The costs of the service departments are allocated on the following bases: Administration, employee-hours; Communications, number of employees; and Facilities, square footage occupied.

Required:

a. Assume that the bank elects to distribute service department costs to production departments using the direct method. What amount of Communications Department costs is allocated to the Deposits Department?

b. Assume the same method of allocation as in requirement (a). What amount of Administration Department costs is allocated to the Loans Department?

c. Assuming that the bank elects to distribute service department costs to other departments using the step method (starting with Facilities and then Communications), what amount of Facilities Department costs is allocated to the Communications Department?

d. Assume the same method of allocation as in requirement (c). What amount of Communication Department costs is allocated to Facilities?

Solutions

Expert Solution

SOLUTION:

A)AMOUNT OF COMMUNICATIONS DEPARTMENT COSTS IS ALLOCATED TO THE DEPOSITS DEPARTMENT IS $176000

SERVICE DEPARTMENT COST ALLOCATION-DIRECT METHOD
SERVICE DEPARTMENT PRODUCTION DEPARTMENT
ADMINISTRATION COMMUNICATION FACILITIES DEPOSITS LOAN
DIRECT CHARGES OF DEPARTMENT 220000 320000 252000 7980000 4900000
ADMINISTRATION(490:319) (220000) 133251 86749
COMMUNICATION((220:180) (320000) 176000 144000
FACILITIES(242700:201800) (252000) 137594 114406
TOTAL 0 0 0 8426845 5244885

B)AMOUNT OF ADMINISTRATION DEPARTMENT COSTS IS ALLOCATED TO THE LOANS DEPARTMENT=$86749

C)

SERVICE DEPARTMENT COST ALLOCATION-STEP METHOD
SERVICE DEPARTMENT PRODUCTION DEPARTMENT
ADMINISTRATION COMMUNICATION FACILITIES DEPOSITS LOAN
DIRECT CHARGES OF DEPARTMENT 220000 320000 252000 7980000 4900000

FACILITIES

(5000:14200:242700:201800)

 2717 7717 (252000) 131896 109670
COMMUNICATION(8:220:180) 6426 (327717) 176710 144581
ADMINISTRATION(490:319) (229143) 138789 90354
TOTAL 0 0 0 8427395 5244605

AMOUNT OF FACILITIES DEPARTMENT COSTS IS ALLOCATED TO THE COMMUNICATION DEPARTMENT IS $7717

D)AMOUNT OF COMMUNICATION DEPARTMENT COSTS IS ALLOCATED TO FACILITIES IS $0

KINDLY UPVOTE

ekkarill92 answered 6 days ago
Next > < Previous

Related Solutions

State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits...
State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the year ended December 31 follows. Administration Communications Facilities Deposits Loans Direct costs $ 210,000 $ 320,000 $ 253,000 $ 8,220,000 $ 4,600,000 Employee hours 20,500 34,000 21,000 480,000 365,000 Number of employees 9 15 7 230 160 Square footage occupied 5,100 13,300 5,800...
State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits...
State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the year ended December 31 follows. Administration Communications Facilities Deposits Loans Direct costs $ 240,000 $ 330,000 $ 260,000 $ 7,890,000 $ 5,400,000 Employee hours 21,000 37,000 20,500 476,000 334,000 Number of employees 7 10 6 210 130 Square footage occupied 5,300 13,400 5,100...
State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits...
State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the year ended December 31 follows: Administration Communications Facilities Deposits Loans Direct costs $ 240,000 $ 300,000 $ 256,000 $ 8,170,000 $ 4,800,000 Employee hours 23,000 34,000 23,000 420,000 367,000 Number of employees 9 17 4 230 160 Square footage occupied 4,500 14,300 5,500...
Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and...
Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Supplying Department Using Department Engineering Administration Maintenance Fabrication Assembly Engineering 0 40 % 0 15 % 45 % Administration 20 % 0 25 % 45 % 10 % Maintenance 0 30 % 0 15 % 55 % Direct cost $ 42,000 $ 248,550 $ 45,000 $ 230,000 $ 80,000 Required: Allocate...
Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and...
Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Supplying Department Using Department Engineering Administration Maintenance Fabrication Assembly Engineering 0 40 % 0 15 % 45 % Administration 20 % 0 25 % 45 % 10 % Maintenance 0 30 % 0 15 % 55 % Direct cost $ 42,000 $ 248,550 $ 45,000 $ 230,000 $ 80,000 Required: Allocate...
Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and...
Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Supplying Department Using Department Engineering Administration Maintenance Fabrication Assembly Engineering 0 50 % 0 10 % 40 % Administration 10 % 0 20 % 50 % 20 % Maintenance 0 50 % 0 20 % 30 % Direct cost $ 24,000 $ 179,500 $ 25,000 $ 185,000 $ 50,000    Required:...
1.Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and...
1.Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded: Supplying Department Using Department Engineering Administration Maintenance Fabrication Assembly Engineering 0 50 % 0 10 % 40 % Administration 10 % 0 20 % 50 % 20 % Maintenance 0 20 % 0 20 % 60 % Direct cost $ 22,000 $ 193,300 $ 25,000 $ 180,000 $ 50,000    Required:...
Av-Y6 Company operates three service departments, administration, maintenance, and personnel and two production departments, assembly and...
Av-Y6 Company operates three service departments, administration, maintenance, and personnel and two production departments, assembly and packaging. Information for the three service departments is given below: Admin Maint Person Directly traced overhead $68,000 $46,000 $77,000 Square feet occupied 2,000 3,500 3,000 Number of employees 36 24 30 Maintenance hours 2,500 2,000 4,000 Information for the two production departments is given below: Assembly Packaging Directly traced overhead $167,060 $120,090 Square feet occupied 2,100 1,400 Number of employees 42 18 Maintenance hours...
Av-Y6 Company operates three service departments, administration, maintenance, and personnel and two production departments, assembly and...
Av-Y6 Company operates three service departments, administration, maintenance, and personnel and two production departments, assembly and packaging. Information for the three service departments is given below: Admin Maint Person Directly traced overhead $65,000 $33,000 $74,000 Square feet occupied 2,000 3,500 3,000 Number of employees 42 24 30 Maintenance hours 2,500 2,000 4,000 Information for the two production departments is given below: Assembly Packaging Directly traced overhead $167,030 $114,090 Square feet occupied 2,100 1,400 Number of employees 36 18 Maintenance hours...
Av-Y6 Company operates three service departments, administration, maintenance, and personnel and two production departments, assembly and...
Av-Y6 Company operates three service departments, administration, maintenance, and personnel and two production departments, assembly and packaging. Information for the three service departments is given below: Admin Maint Person Directly traced overhead $68,000 $46,000 $77,000 Square feet occupied 2,000 3,500 3,000 Number of employees 36 24 30 Maintenance hours 2,500 2,000 4,000 Information for the two production departments is given below: Assembly Packaging Directly traced overhead $167,060 $120,090 Square feet occupied 2,100 1,400 Number of employees 42 18 Maintenance hours...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT