Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine
Question:
Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance and janitorial labors are performed throughout the production process by nonproduction employees. Maintenance and janitorial costs are allocated based on machine hours used and the number of trees in each department, respectively. The company estimates that the cutting and pruning areas typically have about 20 and 60 trees, respectively, in them at one time. The company also estimates that the cutting process requires about 9 times as many machine hours as the pruning process. The total costs of each department are as follows:
Maintenance Department...................................................$ 7,800
Janitorial Department...........................................................5,000
Cutting Department..............................................................54,500
Pruning Department..............................................................11,000
Using the direct method of support department cost allocation, determine the total cost of each production department after allocating all support costs to the production departments.
Step by Step Answer:
Forensic And Investigative Accounting
ISBN: 9780808056300
10th Edition
Authors: G. Stevenson Smith D. Larry Crumbley, Edmund D. Fenton