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Skiphoop manufactures two types of piggy banks, a kangaroo-shaped piggy bank and a platypus-shaped piggy bank, in two separate production departments. The plant is highly
Skiphoop manufactures two types of piggy banks, a kangaroo-shaped piggy bank and a platypus-shaped piggy bank, in two separate production departments. The plant is highly automated and contains only two other support departments: (1) engineering and design (ED); and (2) information systems (IS). Skiphoop allocates support department costs according to estimated service use. Information for the year just ended was as follows.
IS ED $2,700 Production Kangaroo-shaped Platypus-shaped $10,000 $20,000 $8,000 Direct costs Service used ED | 10% I 20% 0 40% 30% 8,000 50% 50% 4,000 Production volume Required: Using the information provided: a) Determine the total cost of operations for each production department under the direct method. b) Determine the total cost of operations for each production department under the step-down method. c) Determine the total cost of operations for each production department under the reciprocal method
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