Question
In: Accounting
Green Hills University offers only graduate-level programs. Green Hills has two principal operating departments, Business and...
Green Hills University offers only graduate-level programs. Green Hills has two principal operating departments, Business and Sciences, and two support departments, Maintenance and Admission Services. The base used to allocate Maintenance services is budgeted total maintenance hours. The base used to allocate Admission services is number of credit hours for a department. The Maintenance budget is $700,000, while the Admission Services budget is $j1,100,000. The following chart summarizes budgeted amounts and allocation-base amounts used by each department:
|
Services Provided: (Annually) |
||||||
|
Budget |
Business |
Sciences |
Maintenance Services |
Admission Services |
||
|
Maintenance Services (in hours) |
$600,000 |
4,000 |
5,000 |
Zero |
5,700 |
|
|
Admission Services (in (credit hours) |
$950,000 |
28,000 |
32,000 |
2,500 |
Zero |
|
Required:
Prepare a schedule which allocates service department costs using the step-down method with the sequence of allocation based on the highest-percentage support concept. Compute the total amount of support costs allocated to each of the two principal operating departments, Business and Sciences.
Solutions
Expert Solution
| Maintenance Service | Admission service | Business | Science | |
| Budget Cost | $600,000 | $950,000 | ||
| Allocate Maintenance cost | ($600,000) | $232,653 | $163,265 | $204,082 |
| Allocate Admission service cost | ($1,182,653) | $551,905 | $630,748 | |
| $0 | $0 | $715,170 | $834,830 |
Maintenance service provided to admission services = 5700/14700
Admission services provided to maintenance = 2500/62500
Maintenance provides the greatest amount of service to support departments, so it is allocated first.
Maintenance $600000 to Admission Services = $600000 x 5700/14700 = $232653
to Business = $600000 x 4000/14700 = $163265
to Science = $600000 x 5000/14700 = $204082
Admission Service costs of $950000 + $232653 = $1182653 are allocated to Business & Science
to Business = $1182653 x 28/60 = $551905
to Science = $1182653 x 32/60 = $630748
ekkarill92 answered 1 year agoRelated Solutions
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
University Printers has two service departments (Maintenance and
Personnel) and two operating departments (Printing and Developing).
Management has decided to allocate maintenance costs on the basis
of machine-hours in each department and personnel costs on the
basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current
period:
Maintenance
Personnel
Printing
Developing
Machine-hours
—
1,000
1,000
3,000
Labor-hours
500
—
500
2,000
Department
direct costs
$
5,000
$
12,000
$
15,000...
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
University Printers has two service departments (Maintenance and
Personnel) and two operating departments (Printing and Developing).
Management has decided to allocate maintenance costs on the basis
of machine-hours in each department and personnel costs on the
basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current
period:
Maintenance
Personnel
Printing
Developing
Machine-hours
−
504
648
2,448
Labor-hours
360
−
252
1,188
Department direct costs
$
12,000
$
27,000
$
27,000...
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
University Printers has two service departments (Maintenance and
Personnel) and two operating departments (Printing and Developing).
Management has decided to allocate maintenance costs on the basis
of machine-hours in each department and personnel costs on the
basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current
period:
Maintenance
Personnel
Printing
Developing
Machine-hours
—
1,000
1,000
3,000
Labor-hours
500
—
500
2,000
Department direct costs
$
5,000
$
12,000
$
15,000...
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
University Printers has two service departments (Maintenance and
Personnel) and two operating departments (Printing and Developing).
Management has decided to allocate maintenance costs on the basis
of machine-hours in each department and personnel costs on the
basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current
period:
Maintenance
Personnel
Printing
Developing
Machine-hours
—
1,000
1,000
3,000
Labor-hours
500
—
500
2,000
Department
direct costs
$
5,000
$
12,000
$
15,000...
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
University Printers has two service departments (Maintenance and
Personnel) and two operating departments (Printing and Developing).
Management has decided to allocate maintenance costs on the basis
of machine-hours in each department and personnel costs on the
basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current
period:
Maintenance
Personnel
Printing
Developing
Machine-hours
—
1,000
1,000
3,000
Labor-hours
500
—
500
2,000
Department direct costs
$
16,000
$
38,750
$
49,100...
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
University Printers has two service departments (Maintenance and
Personnel) and two operating departments (Printing and Developing).
Management has decided to allocate maintenance costs on the basis
of machine-hours in each department and personnel costs on the
basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current
period:
Maintenance
Personnel
Printing
Developing
Machine-hours
−
640
520
2,840
Labor-hours
399
−
357
1,344
Department direct costs
$
11,000
$
22,000
$
30,000...
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
University Printers has two service departments (Maintenance and
Personnel) and two operating departments (Printing and Developing).
Management has decided to allocate maintenance costs on the basis
of machine-hours in each department and personnel costs on the
basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current
period:
Maintenance
Personnel
Printing
Developing
Machine-hours
—
2,000
2,000
4,000
Labor-hours
900
—
900
2,100
Department direct costs
$
3,600
$
13,600
$
14,200...
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
University Printers has two service departments (Maintenance and
Personnel) and two operating departments (Printing and Developing).
Management has decided to allocate maintenance costs on the basis
of machine-hours in each department and personnel costs on the
basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current
period:
Maintenance
Personnel
Printing
Developing
Machine-hours
—
1,000
1,000
3,000
Labor-hours
500
—
500
2,000
Department direct costs
$
14,500
$
35,500
$
47,350...
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
University Printers has two service departments (Maintenance and
Personnel) and two operating departments (Printing and Developing).
Management has decided to allocate maintenance costs on the basis
of machine-hours in each department and personnel costs on the
basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current
period:
Maintenance
Personnel
Printing
Developing
Machine-hours
−
640
520
2,840
Labor-hours
399
−
357
1,344
Department direct costs
$
11,000
$
22,000
$
30,000...
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
University Printers has two service departments (Maintenance and
Personnel) and two operating departments (Printing and Developing).
Management has decided to allocate maintenance costs on the basis
of machine-hours in each department and personnel costs on the
basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current
period:
Maintenance
Personnel
Printing
Developing
Machine-hours
—
1,000
1,000
3,000
Labor-hours
500
—
500
2,000
Department direct costs
$
5,000
$
12,000
$
15,000...
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