Question
In: Accounting
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2)....
- Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows:
|
Allocation of support departments |
S1 |
S2 |
P1 |
P2 |
|
|
S1 |
- |
10% |
40% |
50% |
|
|
S2 |
20% |
- |
50% |
30% |
|
|
Direct costs |
£4,500 |
£8,000 |
£10,000 |
£15,000 |
Required:
|
a. |
Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. |
|
b. |
Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. |
- Describe the differences between support and producing departments. Give two examples of each.
Solutions
Expert Solution
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| Leader Company | |||||
| Answer 1- Direct Method | S 1 | S 2 | P 1 | P 2 | Total |
| S 1 | 40.00% | 50.00% | 90.00% | ||
| S 1 % | 44.44% | 55.56% | |||
| S 2 | 50.00% | 30.00% | 80.00% | ||
| S 2 % | 62.50% | 37.50% | |||
| Department cost | 4,500.00 | 8,000.00 | 10,000.00 | 15,000.00 | 37,500.00 |
| Allocation | |||||
| Actuarial | (4,500.00) | 2,000.00 | 2,500.00 | - | |
| Premium | (8,000.00) | 5,000.00 | 3,000.00 | - | |
| Total cost after allocation | - | - | 17,000.00 | 20,500.00 | 37,500.00 |
| Answer 2- Sequential Method | S 1 | S 2 | P 1 | P 2 | Total |
| S 1 | 40.00% | 50.00% | 90.00% | ||
| S 1 % | 44.44% | 55.56% | |||
| S 2 | 20.00% | 50.00% | 30.00% | 100.00% | |
| Department cost | 4,500.00 | 8,000.00 | 10,000.00 | 15,000.00 | 37,500.00 |
| Allocation | |||||
| S 2 | 1,600.00 | (8,000.00) | 4,000.00 | 2,400.00 | - |
| Department cost after allocation | 6,100.00 | - | 14,000.00 | 17,400.00 | 37,500.00 |
| S 1 | (6,100.00) | - | 2,711.00 | 3,389.00 | - |
| Total cost after allocation | - | - | 16,711.00 | 20,789.00 | 37,500.00 |
| Producing departments are primarily responsible for making products. These department incur direct costs. Example are Assembling and Finishing department. |
| Supporting departments provides only service to producing departments. They are not involved in making products. These department incur indirect costs. Example are maintenance and janitorial costs. |
ekkarill92 answered 3 years agoRelated Solutions
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2)....
Leader Company has two support departments (S1 and S2) and two
producing departments (P1 and P2). Estimated direct costs and
percentages of services used by these departments are as
follows:
Allocation of support departments
S1
S2
P1
P2
S1
-
10%
40%
50%
S2
20%
-
50%
30%
Direct costs
£4,500
£8,000
£10,000
£15,000
Required:
a.
Prepare a schedule allocating the support department costs to
the producing departments using the direct allocation method.
b.
Prepare a schedule allocating the support...
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2)....
Leader Company has two support departments (S1 and S2) and two
producing departments (P1 and P2). Estimated direct costs and
percentages of services used by these departments are as
follows:
Allocation of support departments
S1
S2
P1
P2
S1
-
10%
40%
50%
S2
20%
-
50%
30%
Direct costs
£4,500
£8,000
£10,000
£15,000
Required:
a.
Prepare a schedule allocating the support department costs to
the producing departments using the direct allocation method.
b.
Prepare a schedule allocating the support...
Leader Company has two support departments (S1 and S2) and two producing departments (P1 and P2)....
Leader Company has two support departments (S1 and S2) and two
producing departments (P1 and P2). Estimated direct costs and
percentages of services used by these departments are as
follows:
Allocation of support departments
S1
S2
P1
P2
S1
-
10%
40%
50%
S2
20%
-
50%
30%
Direct costs
£4,500
£8,000
£10,000
£15,000
Required:
a.
Prepare a schedule allocating the support department costs to
the producing departments using the direct allocation method.
b.
Prepare a schedule allocating the support...
Craylon Corp has two service departments, S1 and S2, and two production departments, P1 and P2....
Craylon Corp has two service departments, S1 and S2, and two
production departments, P1 and P2.
The data for April were as follows:
Services provided to:
Activity
Costs
S1
S2
P1
P2
S1
$100,000
25%
40%
35%
S2
$80,000
10%
55%
35%
Fixed Costs
P1
$400,000
P2
$500,000
One of the algebraic equations in linear form
for an activity using the reciprocal method is
S2 = 80,000 +.25S1
S1=100,000 + .25S2
S2 = 80,000 + .35S1
S1 = 100,000 +.10S2
Campaign Printing has two service departments, S1 and S2, and two production departments, P1 and P2....
Campaign Printing has two service departments, S1 and S2, and
two production departments, P1 and P2.
The data for May were as follows:
Services provided to:
Activity
Pre-allocation Costs
S1
S2
P1
P2
S1
$90,000
10%
40%
50%
S2
$60,000
20%
55%
25%
Pre-allocation Costs
P1
$360,000
P2
$520,000
Required:
Allocate service departments costs (S1 & S2) to the
production departments (P1 & P2) using reciprocal
method
Set up linear equations to solve for the total
costs incurred in S1...
Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and...
Robinson Products Company has two service departments (S1 and
S2) and two production departments (P1 and P2). The distribution of
each service department’s efforts (in percentages) to the other
departments is:
From
To
S1
S2
P1
P2
S1
—
10
%
20
%
?
%
S2
10
%
—
?
30
The direct operating costs of the departments (including both
variable and fixed costs) are:
S1
$
180,000
S2
60,000
P1
50,000
P2
120,000
Required:
1. Determine the total cost...
Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and...
Robinson Products Company has two service departments (S1 and
S2) and two production departments (P1 and P2). The distribution of
each service department’s efforts (in percentages) to the other
departments is:
From
To
S1
S2
P1
P2
S1
—
20
%
30
%
?
%
S2
20
%
—
?
40
The direct operating costs of the departments (including both
variable and fixed costs) are:
S1
$220,000
S2
$74,000
P1
$61,000
P2
$175,000
Required:
1. Determine the total cost of...
Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and...
Robinson Products Company has two service departments (S1 and
S2) and two production departments (P1 and P2). The distribution of
each service department’s efforts (in percentages) to the other
departments is:
From
To
S1
S2
P1
P2
S1
—
20
%
30
%
?
%
S2
20
%
—
?
40
The direct operating costs of the departments (including both
variable and fixed costs) are:
S1
$
265,000
S2
83,000
P1
70,000
P2
220,000
Required:
1. Determine the total cost...
Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and...
Robinson Products Company has two service departments (S1 and
S2) and two production departments (P1 and P2). The distribution of
each service department’s efforts (in percentages) to the other
departments is:
TO
FROM
S1
S2
P1
P2
S1
-
20%
30%
?%
S2
20%
-
?
40%
The direct operating costs of the departments (including both
variable and fixed costs) are:
S1
$ 220,000
S2
$74,000
P1
$ 61,000
P2
$175,000
Required:
1. Determine the total cost of P1 and...
Robinson Products Company has two service departments (S1 and S2) and two production departments (P1 and...
Robinson Products Company has two service departments (S1 and
S2) and two production departments (P1 and P2). The distribution of
each service department’s efforts (in percentages) to the other
departments is:
From
To
S1
S2
P1
P2
S1
—
20
%
30
%
?
%
S2
20
%
—
?
40
The direct operating costs of the departments (including both
variable and fixed costs) are:
S1
$
250,000
S2
80,000
P1
67,000
P2
205,000
Required:
1. Determine the total cost...
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