A. The Grey Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs...

A. The Grey Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $300,000 are allocated on the basis of machine hours. The Accounting Department's costs of $120,000 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $300,000 and $500,000, respectively.

	Maintenance	Accounting	A	B
Machine hours	480	20	2,300	200
Number of employees	2	2	8	4

What are the total service department costs allocated to Department A using the step method if the maintenance department costs are allocated first?

Solutions

Expert Solution

Total service department costs allocated to Department A can be computed as:

Thus,Total service department costs allocated to Department A=$81,587

*note

As maintenance department cost is alloated based on number of machine hours, thus the total machine hours are taken as:20+2300+200=2520

As accounting department cost is allocated based on number of employees , thus total no. of employees=8+4=12 are taken

Maintenance Accounting $300,000 ($300,000) ($300,000/2,520*20) Department costs before allocation Allocation of maintenance department costs Subtotal Allocation of accounting department costs $120,000 $2,381($300,000/2,520*2,300) $122,381 ($122,381) ($122,381/12*8) $300,000 $273,810 ($300,000/2,520*200) $573,810 $81,587 ($122,381/12*4) $500,000 $23,810 $523,810 $40,794

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

The Grey Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of...

The Grey Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $300,000 are allocated on the basis of machine hours. The Accounting Department's costs of $120,000 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $300,000 and $500,000, respectively. Maintenance Accounting A B Machine hours 480 20 2,300 200 Number of employees 2 2 8 4 What are the total service...

The Merchant Manufacturing Company has two service departments — purchasing and maintenance, and two production departments...

The Merchant Manufacturing Company has two service departments — purchasing and maintenance, and two production departments — fabrication and assembly. The distribution of each service department's efforts to the other departments is shown below: FROM TO Purchasing Maintenance Fabrication Assembly Purchasing 0 % 15 % 75 % 10 % Maintenance 55 % 0 % 35 % 10 % The direct operating costs of the departments (including both variable and fixed costs) were as follows: Purchasing $ 156,000 Maintenance 78,000 Fabrication...

Mushed’s String Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are...

Mushed’s String Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance Personnel A B Budgeted costs $320,000 $80,000 $160,000 $240,000 Budgeted maintenance-hours NA 200 240 160...

Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $160,000 are...

Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $160,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $40,000 are allocated based on the number of employees. The costs of operating departments A and B are $80,000 and $120,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance Department Personnel Department A B Budgeted costs $160,000 $40,000 $80,000 $120,000 Budgeted maintenance-hours NA 400...

Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are...

Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted machine-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance Department Personnel Department A B Budgeted costs $300,000 $100,000 $160,000 $240,000 Budgeted maintenance-hours NA 800...

1). The Merchant Manufacturing Company has two service departments — purchasing and maintenance, and two production...

1). The Merchant Manufacturing Company has two service departments — purchasing and maintenance, and two production departments — fabrication and assembly. The distribution of each service department's efforts to the other departments is shown below: FROM TO Purchasing Maintenance Fabrication Assembly Purchasing 0 % 60 % 30 % 10 % Maintenance 40 % 0 % 45 % 15 % The direct operating costs of the departments (including both variable and fixed costs) were as follows: Purchasing $ 129,000 Maintenance 51,000...

a. Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and...

a. Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Proportion of Services Used by Department Direct Costs Maintenance Cafeteria Machining Assembly Machining $ 98,000 Assembly 74,400 Maintenance 46,000 — 0.2 0.6 0.2 Cafeteria 37,000 0.6 — 0.1 0.3 Exercise 11-27 (Algo) Cost Allocation: Direct Method (LO 11-2) Required: Compute the...

Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria....

Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Proportion of Services Used by Department Direct Costs Maintenance Cafeteria Machining Assembly Machining $ 115,000 Assembly 80,000 Maintenance 49,000 — 0.3 0.4 0.3 Cafeteria 33,000 0.6 — 0.2 0.2 Required: Use the step method to allocate the service costs, using the following:...

Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria....

Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Proportion of Services Used by Department Direct Costs Maintenance Cafeteria Machining Assembly Machining $ 96,000 Assembly 70,400 Maintenance 43,600 — 0.2 0.5 0.3 Cafeteria 35,000 0.6 — 0.2 0.2 Assume that both Machining and Assembly work on just two jobs during the...

Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria....

Caro Manufacturing has two production departments, Machining and Assembly, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of August follow: Proportion of Services Used by Department Direct Costs Maintenance Cafeteria Machining Assembly Machining $ 125,000 Assembly 84,000 Maintenance 52,000 — 0.2 0.5 0.3 Cafeteria 33,000 0.6 — 0.2 0.2 Required: Use the reciprocal method to allocate the service costs. (Matrix algebra is...

Subjects