Question
Boyce-Hart Manufacturing produces decorative sweet potatoes, suitable for framing.The company has two support departments (Maintenance and Inventory Control) and two production departments, Production Departments 1
Boyce-Hart Manufacturing produces decorative sweet potatoes, suitable for framing.The company has two support departments (Maintenance and Inventory Control) and two production departments, Production Departments 1 (Baking) and 2 (Painting). The company uses the following cost drivers for Maintenance and Inventory Control costs:
Support Department Cost Driver
Maintenance Square footage to be serviced
Inventory Control Department Labor hours worked
The table below provides data related to each of the four departments.The company uses the sequential method of allocating support costs (except for the manager of one department, Tim "Go-Getter" Yetter, who keeps insisting on using the reciprocal method.)
MaintenanceInventory Control Production Production
Department Department Department 1 Department 2
Square feet 600 1,000 3,000 6,000
Labor hours 700 2,000 5,000 10,000
Production costs $100,000 $200,000 $800,000 $1,000,000
Determine the total costs of all departments after allocating support department costs, using the sequential method, allocating the support department with the lowest costs first.Even Go-Getter Yetter decides to use the sequential method after succumbing to peer pressure and a lazy professor.
Show all calculations.
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