Support activity cost allocation Jake's Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities tased on aet value. Maintenance costs are normally allocated based on machise hours. Howeve Maintenance costs typically correlate more with the number of service calls. Informanion regarding the activities is provided in the following table: Maintenance Security Mining Cutting Number of service calls 17 20 60 20 Machine hours 89 88 182 176 $200,000 Asset value $80,000 $300,000 $300,000 Department cost 25,000 $42,500 $160,000 $95,000 eBook Calculator d. None of the above 2. Based on your response to part (1), determine the total costs allecated from each support activity to the other activities using the reciprocal services method and the most appropriate cost driver for Maintenance. Maintenance Security Mining Department Department Department Cutting Department Maintenance cost allocation Security cost allocation Production activities total costs 3. Assume Jake's Gems is considering cutting costs by switching to a simpler support activity cost allocation method. Determine the total costs allocated from each support activity to the other activities. . Mining Cutting Particulars Department Department 1270 xs Maintenance cost Security cost Production activities total cost Is t viable for the company to choose the direct method of cost allocation? Yes Which of the following supports your answer? a. The direct cost allbcation method is too simple and it is not accurate b. The difference between the direct cost allocation method and the reciprocal method is minimal and the direct method is easier c. The reciprocal method of cost allocation is more accurate and easier than the direct method Check Hy Work Previous Emal instructor Sve and Eair All work saved. Submit Assignment for Grading Support activity cost allocation Jake's Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities tased on aet value. Maintenance costs are normally allocated based on machise hours. Howeve Maintenance costs typically correlate more with the number of service calls. Informanion regarding the activities is provided in the following table: Maintenance Security Mining Cutting Number of service calls 17 20 60 20 Machine hours 89 88 182 176 $200,000 Asset value $80,000 $300,000 $300,000 Department cost 25,000 $42,500 $160,000 $95,000 eBook Calculator d. None of the above 2. Based on your response to part (1), determine the total costs allecated from each support activity to the other activities using the reciprocal services method and the most appropriate cost driver for Maintenance. Maintenance Security Mining Department Department Department Cutting Department Maintenance cost allocation Security cost allocation Production activities total costs 3. Assume Jake's Gems is considering cutting costs by switching to a simpler support activity cost allocation method. Determine the total costs allocated from each support activity to the other activities. . Mining Cutting Particulars Department Department 1270 xs Maintenance cost Security cost Production activities total cost Is t viable for the company to choose the direct method of cost allocation? Yes Which of the following supports your answer? a. The direct cost allbcation method is too simple and it is not accurate b. The difference between the direct cost allocation method and the reciprocal method is minimal and the direct method is easier c. The reciprocal method of cost allocation is more accurate and easier than the direct method Check Hy Work Previous Emal instructor Sve and Eair All work saved. Submit Assignment for Grading
