Terrell Company manufactures a product in a factory that has two producing departments, cutting and polishing, and

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Terrell Company manufactures a product in a factory that has two producing departments, cutting and polishing, and two support departments, maintenance and human resources. The activity driver for maintenance is machine hours, and the activity driver for human resources is number of employees. The following data pertain to Terrell Company:

Support Departments Producing Departments Human Resources Maintenance Cutting Polishing Direct costs $200,000 $130,000 $112,400 $83,400 Normal activity:

Number of employees = 10 69) ae Maintenance hours 600 — 8,000 2,000 Required:

1. Calculate the allocation ratios to be used under the direct method for the human resources and maintenance departments. (Each support department will have two allocation ratios—one for cutting and the other for polishing.) 2. Allocate the support-department costs to the producing departments using the direct method. lop8

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Management Accounting

ISBN: 9780324002263

5th Edition

Authors: Don R Hansen, Maryanne M Mowen

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