Support Department Cost Allocation—Reciprocal Services Method

Blue Africa Inc. produces laptops and desktop computers. The company’s production activities mainly occur in what the company calls its Laser and Forming departments. The Cafeteria and Security departments support the company’s production activities and allocate costs based on the number of employees and square feet, respectively. The total cost of the Security Department is $252,000. The total cost of the Cafeteria Department is $487,000. The number of employees and the square footage in each department are as follows:

Using the reciprocal services method of support department cost allocation, determine the total costs from the Security Department that should be allocated to the Cafeteria Department and to each of the production departments.

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The reciprocal services method considers all inter-support-department services, and thus is the most accurate of the three support department allocation methods. The proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated must be determined. Then, the support department costs are allocated simultaneously among the departments.

Tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,700 hours.

During May, the department operated at 9,080 hours, and the factory overhead costs incurred were indirect factory wages, $42,268; power and light, $22,064; indirect materials, $18,700; supervisory salaries, $19,800; depreciation of plant and equipment, $35,700; and insurance and property taxes, $18,450.

Required:

Jarvene Corporation uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the company’s processing departments:

The cost of beginning inventory according to the company’s costing system was $7,833 of which $4,865 was for materials and the remainder was for conversion cost. The costs added during the month amounted to $177,160. The costs per equivalent unit for the month were:

Required:

1. Compute the total cost per equivalent unit for the month.

2. Compute the equivalent units of material and conversion in the ending inventory.

3. Compute the equivalent units of material and conversion that were required to complete the beginning inventory.

4. Compute the number of units started and completed during the month.

5. Compute the cost of ending work in process inventory for materials, conversion, and in total for the month.

6. Compute the cost of the units transferred to the next department for materials, conversion, and in total for the month.

4,5,6 are willing to fixed, thx

tiger Equipment Inc., a manufacturer of construction equipment, prepared the following factory overhead cost budget for the Welding Department for May of the current year. The company expected to operate the department at 100% of normal capacity of 8,700 hours.

During May, the department operated at 9,080 hours, and the factory overhead costs incurred were indirect factory wages, $42,268; power and light, $22,064; indirect materials, $18,700; supervisory salaries, $19,800; depreciation of plant and equipment, $35,700; and insurance and property taxes, $18,450.

Required:

1)

A retail furniture dealer counted the following goods in inventory on December 31. An accountant recommended that the inventory items be valued at the lower of cost or market price. Compute the total value of the inventory based on the lower of cost or market price. If required, round your answers to two decimal places.

QUESTION 1                                                                                                            

The Cutting Department of Oak Ltd has the following production and manufacturing cost data for March:

(Assume that the company uses the weighted-average method of accounting for units and costs)

1. Determine the equivalent units for July for the Finishing Department.                                     
2. Compute the costs per equivalent unit for July for the Finishing Department.                        
3. Determine the total cost of ending work in process inventory.                                                     
4. Determine the total cost of units transferred out.                                                                           

Buddy, Inc. produces and sells only one product. The following data refer to the year just completed:

Beginning Inventory 0 units

Units produced........................... 10,000

Units sold...................................... 8,000

Sales price per unit.................... $250

Variable selling and administrative expenses per unit $ 12

Fixed Selling and administrative expenses (Total) $190,000

Manufacturing Costs:

Direct materials cost per unit..................................................$ 50

Direct labor cost per unit..........................................................$ 75

Variable manufacturing overhead cost per unit..............$ 15

Fixed manufacturing overhead (Total).................................$160,000

Required:
a. What is the unit product cost for the month under variable costing?

b. What is the unit product cost for the month under absorption costing?
c. Prepare a contribution format income statement for the year using variable costing.

d. Prepare an income statement for the year using absorption costing.