Question
Logan Products has two production departmentsassembly and finishing. These are supported by two service departmentssourcing (purchasing and handling of materials and human resources) and operations
Logan Products has two production departmentsassembly and finishing. These are supported by two service departmentssourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments.
Total Labor Hours Used by Departments
Sourcing Operations Assembly Finishing
Sourcing - 20,000 40,000 60,000
Operations 10,000 - 60,000 50,000
The costs incurred in the plant are as follows:
Departments Departmental Costs
Sourcing $200,000
Operations 300,000
Assembly 448,000
Finishing 293,000
Total $1,263,000
Required:
Use fourdecimal places (e.g., 33.3333%) in your calculation of percentages.
1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, whenthe sourcing department that provides the greatest percentage of services to other service departments goes first), and (c) the reciprocal method?
2. What are the total costs in the production departments after allocation?
(For all requirements, do not round intermediate calculations. Round your final answer to nearest whole dollar amount.)
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