Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
Company K has two operating departments, Fabrication and Finishing. In addition, the company has two supporting departments. The Power department provides electricity to all departments,
Company K has two operating departments, Fabrication and Finishing. In addition, the company has two supporting departments. The Power department provides electricity to all departments, whereas the maintenance department is responsible for the repairs and maintenance work of the entire company. The Power department costs are allocated based on kilowatt hours used. Maintenance department costs are allocated based on the number of internal work orders. The supporting departments' costs are allocated to the operating departments using a single rate. The data below summarizes the support hours utilized by each department as well as their budgeted variable and fixed costs: Fabrication Finishing Power Maintenance Department variable costs 56,000 21,750 410,000 180,000 Department fixed costs 230,500 157,000 1,560,000 430,000 Kilowatt hours 44,500 27,500 - 12,000 Internal work orders 250 360 110 - Required: 1. Based on the data provided, calculate the total costs of the operating departments, after the allocated supporting departments' costs, using: a. Direct method b. Step down method with Maintenance department first 2. Provide one strategy for deciding which supporting department to be allocated first
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started