Answered step by step
Verified Expert Solution
Link Copied!

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

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of Accounting

Authors: Needles, Powers, crosson

11th Edition

1439037744, 978-1133626985, 978-1439037744

More Books

Students also viewed these Accounting questions