Question
Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows: Support
Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows:
Support Department | Cost Driver | |
Janitorial Department | Square footage to be serviced | |
Cafeteria Department | Number of employees |
Janitorial Department | Cafeteria Department | Cutting Department | Assembly Department | |
Department costs | $310,000 | $169,000 | $1,504,000 | $680,000 |
Square feet | 50 | 5,000 | 1,000 | 4,000 |
Number of employees | 10 | 3 | 30 | 10 |
Allocate the support department costs to the production departments using the sequential method.
Allocate the support department with the highest department cost first.
Cutting Department | Assembly Department | ||
Janitorial Department | $ | $ | |
Cafeteria Department | $ | $ |
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Lilys Lemonade Stand makes three types of lemonade: pure, raspberry, and strawberry. The lemonade is produced through a joint mixing process that costs a total of $30 per batch. One batch produces 32 cups of pure lemonade, 21 cups of strawberry lemonade, and 21 cups of raspberry lemonade. After the split-off point, all three lemonades can be sold for $0.80 per cup, but strawberry and raspberry lemonade can be processed further by adding artificial coloring and flavoring and sold for $0.95 and $1.00 per cup, respectively. It is estimated that these additional processing costs are $0.75 and $1.80 per batch for strawberry and raspberry lemonade, respectively.
Allocate the joint costs of production to each product using the net realizable value method.
Joint Product | Allocation |
Pure lemonade | $ |
Strawberry lemonade | |
Raspberry lemonade | |
Totals | $ |
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Becker Tabletops has two support departments ( Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows:
Support Department | Cost Driver | |
Janitorial Department | Square footage to be serviced | |
Cafeteria Department | Number of employees |
Janitorial Department | Cafeteria Department | Cutting Department | Assembly Department | |
Department costs | $310,000 | $169,000 | $1,504,000 | $680,000 |
Square feet | 50 | 5,000 | 1,000 | 4,000 |
Number of employees | 10 | 3 | 30 | 10 |
Allocate the support department costs to the production departments using the reciprocal services method.
Cutting Department | Assembly Department | |||
Janitorial Department cost allocation | $ | $ | ||
Cafeteria Department cost allocation | $ | $ |
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