Apex Company?s copy department, which does almost all of the photocopying for the sales department and the administrative department, budgets the following costs for the year, based on the expected activity of 4,977,300 copies: Salaries (fixed) $101,200 Employee benefits (fixed) 10,300 Depreciation of copy machines (fixed) 12,700 Utilities (fixed) 4,300 Paper (variable, 1 cent per copy) 49,773 Toner (variable, 1 cent per copy) 49,773 The costs are assigned to two cost pools, one for fixed and one for variable costs. The costs are then assigned to the sales department and the administrative department. Fixed costs are assigned on a lump-sum basis, 40 percent to sales and 60 percent to administration. The variable costs are assigned at a rate of 2 cents per copy. Assuming 4,777,300 copies were made during the year, 2,480,500 for sales and 2,296,800 for administration, calculate the copy department costs allocated to sales and administration. Costs allocated to sales $ Costs allocated to administration $ Problem 6-2 Kiddo Company manufactures and ships children?s stuffed animals across the nation. The following are profit statements for the company?s two lines of business: Stock Stuffed Animals (Stock) Custom Stuffed Animals (Custom) Sales $7,128,000 $4,752,000 Less direct costs 2,500,000 4,000,000 Less allocated costs 3,380,000 1,160,000 Income (loss) before taxes $1,248,000 $(408,000) Costs that are easily associated with each line of business are included in the direct costs. Allocated costs include costs that are not directly traced to the business units. These costs include employee benefits, rent, telecommunications costs, and general and administrative costs, such as the salary of the CEO of Kiddo. At the start of 2014, allocated costs were estimated as follows: Employee benefits $1,410,000 Rent 1,530,000 Telecommunications 493,000 General and administrative costs 1,107,000 Total $4,540,000 In the past, allocations have been based on headcount (the number of employees in each business unit). There were 270 employees in Stock and 90 employees in Custom. The new controller of Kiddo believes that the key driver of employee benefits and telecommunications costs is headcount. However, rent is driven by space occupied, and general and administrative costs are driven by relative sales. Kiddo rents 41,000 square feet; approximately 20,500 is occupied by Stock employees and 20,500 by Custom personnel. Prepare profit reports for Stock and Custom, assuming the company allocates costs using headcount, space occupied, and sales as allocation bases. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Snowcap Electronics is a manufacturer of data storage devices. Snowcap consists of two service departments (maintenance and computing) and two production departments (assembly and testing). Maintenance costs are allocated on the basis of square footage occupied, and computing costs are allocated on the basis of the number of computer terminals. The following data relate to allocations of service department costs: Maintenance Computing Assembly Testing Service department costs $624,000 $1,040,000 Square footage 119,250 39,750 Terminals 36 64 Allocate the service department costs to production departments using the direct method. (Round answers to 0 decimal places, e.g. 15,252.) Alloction of cost Service depts. Assembly Testing Maintenance $ $ Computing Total $ $

\fExpected capacity 4,977,300 copies Fixed costs Salary Employee Benefit Depreciation Utilities Total $101,200 $10,300 $12,700 $4,300 $128,500 Total copies made during the year For Sales depratment For Admin department Allocation of costs Fixed costs Variable costs Total Cost Variable Costs Paper Toner 4,777,300 2,480,500 2,296,800 Sales dept Admin dept $51,400 $77,100 $49,610 $45,936 $101,010 $123,036 $49,773 $49,773 Variable Cost per unit Paper Toner Total $0.01 $0.01 $0.02 Sales Less: Direct costs Less: Allocated costs Income (Loss) before tax Number of employees Area Occupied (sq ft.) Profit report Sales Less: Direct costs Less: Allocated costs Income (Loss) before tax Animals (Stock) Animals (Custom) $7,128,000 $4,752,000 $2,500,000 $4,000,000 $3,380,000 $1,160,000 $1,248,000 $408,000 270 20,500 90 20,500 Animals (Stock) Animals (Custom) $7,128,000 $4,752,000 $2,500,000 $4,000,000 $2,856,450 $1,683,550 $1,771,550 $931,550 Total $11,880,000 360 41,000 Allocated Costs Employee benefits Rent Telecommunications G&A Costs Total Driver $1,410,000 Headcounts $1,530,000 Space occupied $493,000 Headcounts $1,107,000 Sales $4,540,000 Distribution of Allocated costs Animals (Stock) Animals (Custom) Employee benefits $1,057,500 $352,500 Rent $765,000 $765,000 Telecommunications $369,750 $123,250 G&A Costs $664,200 $442,800 Total $2,856,450 $1,683,550 Maintenance Computing Assembly Testing Service department costs $624,000 $1,040,000 Square footage 119,250 39,750 Terminals 36 64 Allocate the service department costs to production departments using the direct method. (Round answers to 0 decimal places, e.g. 15,252.) Alloction of cost Service depts. Assembly Testing Maintenance $ $ Computing Total $ $