Question
In: Accounting
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 P2 using the direct method.
2. Determine the total cost of P1 and P2 using the step method.
3. Determine the total cost of P1 and P2 using the reciprocal method.
(Do not round intermediate calculations.).
***Please show all your work on how you get the answers in a working note. I would really need to understand this problem and how its solved. Please show me how you get all numbers if its not obvious from the information given. Thank you!***
THIS QUESTION WAS POSTED BEFORE AND WAS INCORRECT BY LAST PERSON THAT SOLVED IT. IM REPOSTING. PLEASE SHOW ALL WORK AND HOW YOU GET ALL CALCULATIONS. ITS IMPORTANT I UNDERSTAND.
Solutions
Expert Solution
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| Robinson Products Company | ||||||
| Data Provided | S 1 | S 2 | P 1 | P 2 | Total | |
| S 1 | 0% | 20.00% | 30.00% | 50.00% | 100.00% | Share of P2 is calculated as 100% less shares of S2 and P1 i.e. 100% less 20% less 30%= 50%. |
| S 2 | 20.00% | 0.00% | 40.00% | 40.00% | 100.00% | Share of P1 is calculated as 100% less shares of S1 and P2 i.e. 100% less 20% less 40%= 40%. |
| Department cost | 220,000.00 | 74,000.00 | 61,000.00 | 175,000.00 | 530,000.00 |
| Under direct method service department costs are allocated only to production department. For that we have to calculate the revised percentage. |
| Direct Method | S 1 | S 2 | P 1 | P 2 | Total |
| Current ratio | |||||
| S 1 | 30.00% | 50.00% | 80.00% | ||
| S 2 | 40.00% | 40.00% | 80.00% | ||
| Revised percentage for direct method | |||||
| S 1 | 37.50% | 62.50% | 100.00% | ||
| S 2 | 50.00% | 50.00% | 100.00% | ||
| Department cost | 220,000.00 | 74,000.00 | 61,000.00 | 175,000.00 | 530,000.00 |
| S 1 | (220,000.00) | 82,500.00 | 137,500.00 | - | |
| S 2 | (74,000.00) | 37,000.00 | 37,000.00 | - | |
| Dept. cost after allocation | - | - | 180,500.00 | 349,500.00 | 530,000.00 |
| Under step method service department with highest cost will be allocated first i.e. S 1 in this case and then next department: |
| Step Method | S 1 | S 2 | P 1 | P 2 | Total |
| S 1- use % given in question. | 0% | 20% | 30% | 50% | 100.00% |
| Department cost | 220,000.00 | 74,000.00 | 61,000.00 | 175,000.00 | 530,000.00 |
| S 1 | (220,000.00) | 44,000.00 | 66,000.00 | 110,000.00 | - |
| Department cost after allocation | - | 118,000.00 | 127,000.00 | 285,000.00 | 530,000.00 |
| S 2- use % calculated in direct method | 50.00% | 50.00% | 100.00% | ||
| Allocation | - | (118,000.00) | 59,000.00 | 59,000.00 | - |
| Dept. cost after allocation | - | - | 186,000.00 | 344,000.00 | 530,000.00 |
| Reciprocal Method | S 1 | S 2 | P 1 | P 2 | Total |
| S 1 | 0.00% | 20.00% | 30.00% | 50.00% | 100.00% |
| S 2 | 20.00% | 0.00% | 40.00% | 40.00% | 100.00% |
| Department cost | 220,000.00 | 74,000.00 | 61,000.00 | 175,000.00 | 530,000.00 |
| Let cost of S 1 is $ X and S 2 is $ Y | |
| So, X= 220000+ 20% of Y | Equation 1 |
| Y= 74000+ 20% of X | Equation 2 |
| Or, X= 220000+ 0.20Y | |
| Y= 74000+ 0.20X |
| Substituting the value of X in equation 2: |
| Y = 74000 + 0.20(220,000 + 0.20Y) |
| Y = 74000 + 44000+.04Y |
| Y – 0.04Y = 74,000+44,000 |
| 0.96Y = 118,000 |
| Y = 118,000/.96 |
| Y = $ 122,917 |
| Substituting the value of Y in equation 1: |
| So, X= 220000+ .20Y |
| So, X= 220000+ 0.20*122917 |
| So, X= 220000+ 24583 |
| X= $ 244,583 |
| Allocation Summary | S 1 | S 2 | P 1 | P 2 | Total |
| S 1 | - | 20.00% | 30.00% | 50.00% | 100.00% |
| S 2 | 20.00% | - | 40.00% | 40.00% | 100.00% |
| Direct costs | 220,000.00 | 74,000.00 | 61,000.00 | 175,000.00 | 530,000.00 |
| Allocation | |||||
| S 1 | (244,583.00) | 48,916.60 | 73,374.90 | 122,291.50 | - |
| S 2 | 24,583.40 | (122,917.00) | 49,166.80 | 49,166.80 | - |
| Department cost after allocation | 0.40 | (0.40) | 183,541.70 | 346,458.30 | 530,000.00 |
ekkarill92 answered 1 year agoRelated Solutions
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:
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
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67,000
P2
205,000
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Nbr of Employees
S1
$3,120,000
75
S2
2,060,000
50
S3
1,000,000
25
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P2
225
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S2
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P2
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40%
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55%
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The data for May were as follows:
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S2
P1
P2
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$90,000
10%
40%
50%
S2
$60,000
20%
55%
25%
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$360,000
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P1
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S2
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£8,000
£10,000
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Prepare a schedule allocating the support department costs to
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-
10%
40%
50%
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20%
-
50%
30%
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P1
P2
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-
10%
40%
50%
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50%
30%
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