Hi, I need all of part A (see below) and some of B. Thank you!
11-54. Step Method with Three Service Departments LO 11-3) excel Model, Inc., produces model automobiles made from metal. It operates two production departments, Molding and Painting, and has three service departments, Administration, Accounting, and Maintenance. The accumulated costs in the three service departments were $250,000, $400,000, and $200,000, respectively. Management is concerned that the costs of its service departments are getting too high. In particular, managers would like to keep the costs of service departments under $3.50 per unit on average. You have been asked to allocate service department costs to the two production departments and compute the unit costs. The company decided that Administration costs should be allocated on the basis of square footage used by each production and service department Accounting costs are allocated on the basis of number of employees. Maintenance costs are allocated on the basis of the dollar value of the equipment in each department. The use of each base by all departments during the current period follows. Used by Allocation Base Administration Accounting Maintenance Molding Painting Building area 10,000 30,000 20,000 360,000 90,000 Employees 18 10 1270 100 Equipment value (in thousands) $ 6.00 $120.00 $17.50 $312.00 $162.00 Direct costs of the Molding Department included $237,500 in direct materials, S337,500 in direct labor, and $112,500 in overhead. The Painting Department's direct costs consisted of $210,000 in direct materials, $200,000 in direct labor, and $75,000 in overhead. Page 483 Required a. Using the step method, determine the allocated costs and the total costs in each of the two producing departments. Ignore self-usage (for example, ignore work done by Administration for itself). Rank order the allocation as follows: (1) Maintenance, (2) Accounting, and (3) Administration. b. Assume that 100,000 units were processed through these two departments. What is the unit cost for the sum of direct materials, direct labor, and overhead (1) for Molding, (2) for Painting, and (3) in total? c. Compute the cost per unit for the service department costs allocated to the production departments. Did the company meet management's standards of keeping service department costs below $3.50 per unit? MODEL, INC. Painting 90.000 Allocation Base Building area Employees Equipment value in 000's) Administration 10,000 18 $ 6.00 Accounting 30,000 10 $ 120.00 Maintenance 20,000 12 $ 17.50 Molding 360.000 70 312.00 100 S $ 162.00 Part a. Proportion Used By Accounting Maintenance Administration Molding Painting Building area Employees Equipment value Round allocations to the nearest dollar. Maintenance Accounting Administration Molding Painting Direct Costs FROM: Maintenance Accounting Administration Totals Correct! Correct! Correct! Total of direct costs for all service and producing departments Part b. $ $ Direct materials Direct labor Overhead (direct) Overhead (allocated) Totals Molding 237,500 337,500 112,500 503,132 1,190,632 Correct! Painting 210,000 200,000 75,000 346,868 831,868 Correct! $ S Unit cost: Molding Painting Total Part c. Unit cost of allocated service department costs 5.03 Molding Painting: 3.47 *- Correct! - Correct
