Interdepartment Services: Step Method Assume that Wilsons, a department store in Massachusetts, allocates the costs of the Personnel and Payroll departments to three retail sales departments, Housewares, Clothing, and Toys. In addition to providing services to the operating departments, Personnel and Payroll provide services to each other. Wilsons allocates Personnel Department costs on the basis of the number of employees and Payroll Department costs on the basis of gross payroll. Cost and allocation information for June is as follows:

	Personnel	Payroll	Housewares	Clothing	Toys
Direct department cost	$25,000	$ 30,340	$50,174	$60,830	$ 45,156
Number of employees	3	5	12	20	10
Gross payroll	$12,960	$ 17,280	$ 36,000	$43,200	$34,560

(a) Determine the percentage of total Personnel Department services that was provided to the Payroll Department. (Round your answer to one decimal place.) Answer

% (b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department. (Round your answer one decimal place.) Answer

% (c) Prepare a schedule showing Personnel Department and Payroll Department cost allocations to the operating departments, assuming Wilson's uses the step method.

For each department below, enter the total costs calculated from your schedule.

Do not round until your final answers. Round answers to the nearest dollar.

	Service Departments		Producing Departments
	Payroll	Personnel	Housewares	Clothing	Toys
Total costs	Answer	Answer	Answer	Answer	Answer

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Inventory Management Metrics Large retailers like Costco and Target typically use gross margin ratio (gross margin sales), inventory turnover (sometimes referred to as inventory turns), and gross margin return on investment (GMROI) to evaluate how well inventory has been managed. The goal is to maximize profits while minimizing the investment in inventory. Below are data for four scenarios, a base scenario (A) followed by three modifications (B, C, and D) to the base scenario.

	Scenario A	Scenario B	Scenario C	Scenario D
Sales	$ 50,000	$ 75,000	$ 60,000	$ 50,000
Cost of goods sold	35,000	35,000	30,000	35,000
Gross profit	$ 15,000	$ 40,000	$ 30,000	$ 15,000
Average inventory	$ 6,000	$ 6,000	$ 6,000	$4,000

For each scenario calculate the gross margin percent, the inventory turnover, and GMROI.

Round your answers to one decimal place. (Example for % answers -- 99.9%)

	Scenario A		Scenario B		Scenario C		Scenario D
Gross Margin %	Answer	%	Answer	%	Answer	%	Answer	%
Inventory Turnover	Answer		Answer		Answer		Answer
GMROI	Answer	%	Answer	%	Answer	%	Answer	%

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Interdepartment Services: Direct Method Wilhelm Manufacturing Company has five operating departments, two of which are producing departments (P1 and P2) and three of which are service departments (S1, S2, and S3). All costs of the service departments are allocated to the producing departments. The following table shows the distribution of services from the service departments.

Services provided from	Services Provided to
	S1	S2	S3	P1	P2
S1	--	10%	20%	28%	42%
S2	5%	--	15	52	28
S3	7	3	--	27	63

The direct operating costs of the service departments are as follows:

S1	$ 150,000
S2	80,000
S3	106,000

Using the step method, prepare a schedule for Wilhelm Manufacturing Company allocating the service department costs to the producing departments. (Round calculations to the nearest dollar.)

	Service Departments			Producing Departments
	S1	S2	S3	P1	P2
Total costs	Answer	Answer	Answer	Answer	Answer

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Cycle Efficiency Clarion Scooters, Inc. runs one 8-hour shift per day. Three different machines are used in the production of electric scooters, Clarions sole product. The operations manager at Clarion is looking at ways to be more efficient and has gathered the following information:

Manufacturing time per batch of 50 scooters
Function	Time
Actual processing time on the machines for one batch of scooters	3.75	hours
Time spent moving a batch of scooters from one station to the next	2.00	hours
Time spent on quality control testing, per batch	45.00	minutes
Time spent setting up equipment, for batch processing	30.00	minutes

The operations manager also noted that, on average, there was about 1 hour of downtime per batch. (Downtime occurred when employees were unavailable to move or test the scooters.) a. What is the cycle time per batch, in hours? Answer

hours b. What is Clarions cycle efficiency? Note: Round your answer to two decimal places (for example, round 8.55555 to 8.56). Answer

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Selecting Cost Allocation Bases and Direct Method Allocations Seattle Company has three producing departments (P1, P2, and P3) for which direct department costs are accumulated. In January, the following indirect costs of operation were incurred.

Plant managers salary and office expense	$20,500
Plant security	6,000
Plant nurses salary and office expense	7,000
Factory depreciation (building)	20,000
Equipment depreciation	15,000
Machine maintenance	7,000
Plant cafeteria cost subsidy	5,000
	$80,500

The following additional data have been collected for the three producing departments:

	P1	P2	P3
Number of employees	20	30	10
Space occupied (square feet)	12,000	6,000	6,000
Direct labor hours	3,400	5,000	1,600
Machine hours	1,500	600	900
Number of nurse office visits	25	20	5

Required a. Determine the common basis for allocation for each of the four cost pools identified below. In addition, calculate the total cost in each of the four cost pools for January.

	Cost pool	Allocation base	Total Cost in pool
1.	Plant manager's exp.	AnswerDirect labor hoursMachine hoursNumber of employeesNumber of nurse office visitsSpace occupied (square feet)	Answer
	Cafeteria subsidy		Answer
			Answer
2.	Plant security	AnswerDirect labor hoursMachine hoursNumber of employeesNumber of nurse office visitsSpace occupied (square feet)	Answer
	Bldg depreciation		Answer
			Answer
3.	Nurse's expense	AnswerDirect labor hoursMachine hoursNumber of employeesNumber of nurse office visitsSpace occupied (square feet)	Answer
4.	Machine maintenance	AnswerDirect labor hoursMachine hoursNumber of employeesNumber of nurse office visitsSpace occupied (square feet)	Answer
	Equipment depreciation		Answer
			Answer

b. Determine the amounts allocated to the three producing departments using the allocation bases used in requirement (a).

	P1	P2	P3	Total
Allocated costs	Answer	Answer	Answer	Answer

c. How much indirect cost would be allocated to each producing department if Seattle Company were using a plantwide rate based on direct labor hours? Note: Round your final answers below to the nearest whole dollar. Note: Do not round the rates used in your calculations.

	P1	P2	P3	Total
Allocated costs	Answer	Answer	Answer	Answer

d. How much indirect cost would be allocated to each producing department if Seattle Company were using a plantwide rate based on machine hours? Note: Round your final answers below to the nearest whole dollar. Note: Do not round the rates used in your calculations.

	P1	P2	P3	Total
Allocated costs	Answer	Answer	Answer	Answer