Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Support Department Cost AllocationDirect Method Charlie's Wood Works produces wood products (e.g., cabinets, tables, picture frames, and so on). Production departments include Cutting and Assembly.

Support Department Cost AllocationDirect Method

Charlie's Wood Works produces wood products (e.g., cabinets, tables, picture frames, and so on). Production departments include Cutting and Assembly. The Janitorial and Security departments support the Cutting and Assembly departments. The Assembly Department spans about 49,920 square feet and holds assets valued at about $74,400. The Cutting Department spans about 28,080 square feet and holds assets valued at about $111,600. Charlie's Wood Works allocates support department costs using the direct method. If costs from the Janitorial Department are allocated based on square feet and costs from the Security Department are allocated based on asset value.

a.Determine the percentage of Janitorial costs that should be allocated to the Assembly Department.

fill in the blank 1

%

b.Determine the percentage of Security costs that should be allocated to the Cutting Department.

fill in the blank 2

%

2.Support Department Cost AllocationSequential Method

Bucknum Boys, Inc., produces hunting gear for buck hunting. The company's main production departments are Molding and Finishing. Production of the hunting gear cannot be accomplished without the supporting tasks of Materials Management and meals for production employees provided by the Cafeteria. Cafeteria costs are always higher than Materials Management costs. The company believes that the number of employees in each department is the best driver of Cafeteria costs. The number of employees in each department is as follows:

Molding Department27Finishing Department30Materials Management Department3Cafeteria Department6

The company also believes that the value of support materials used in each department is the best driver for Materials Management costs. The support materials used in the Molding and Finishing departments are valued at $1,800 and $2,700, respectively. Using the sequential method for support department cost allocation (allocating Cafeteria costs first):

a.Determine the percentage of Cafeteria costs that should be allocated to the Molding Department.

fill in the blank 1

%

b.Determine the percentage of Materials Management costs that should be allocated to the Finishing Department.

fill in the blank 2

%

3.Support Department Cost AllocationDirect Method

Yo-Down Inc. produces yogurt. Information related to the company's yogurt production follows:

Production

Department 1Production

Department 2Production

Department 3Support Department 1 cost driver1,400300300

Support Department 1's costs total $120,000. Using the direct method of support department cost allocation, determine the costs from Support Department 1 that should be allocated to each production department.

Production

Department 1Production

Department 2Production

Department 3Support Department 1 cost allocation$fill in the blank 1

$fill in the blank 2

$fill in the blank 3

4.Support Department Cost AllocationSequential Method

Snowy River Stallion Inc. produces horse and rancher equipment. Costs from Support Department 1 are allocated based on the number of employees. Costs from Support Department 2 are allocated based on asset value. Relevant department information is provided in the following table:

Support

Department 1Support

Department 2Production

Department 1Production

Department 2Number of employees972518Asset value$1,150$670$6,230$5,100Department cost$20,000$15,500$99,000$79,000

Using the sequential method of support department cost allocation, determine the total costs from Support Department 1 (assuming they are allocated first) that should be allocated to Support Department 2 and to each of the production departments.

Support

Department 2Production

Department 1Production

Department 2Support Department 1 cost allocation$fill in the blank 1

$fill in the blank 2

$fill in the blank 3

5.Support Department Cost AllocationDirect Method

Christmas Timber, Inc., produces Christmas trees. The trees are produced through a cutting and pruning process. Machine maintenance and janitorial labors are performed throughout the production process by nonproduction employees. Maintenance and janitorial costs are allocated based on machine hours used and the number of trees in each department, respectively. The company estimates that the cutting and pruning areas typically have about 18 and 72 trees, respectively, in them at 1 time. The company also estimates that the cutting process requires about 9 times as many machine hours as the pruning process. The total costs of each department are as follows:

Maintenance Department$8,000Janitorial Department5,000Cutting Department51,000Pruning Department12,000

Using the direct method of support department cost allocation, determine the total cost of each production department after allocating all support costs to the production departments.

Cutting

DepartmentPruning

DepartmentProduction departments total costs$fill in the blank 1

$fill in the blank 2

6.Support department cost allocationsequential method

Crystal Scarves & Co. produces winter scarves. The scarves are produced in the Cutting and Sewing departments. The Maintenance and Security departments support these production departments, and allocate costs based on machine hours and square feet, respectively. Information about each department is provided in the following table:

DepartmentTotal CostNumber of EmployeesMachine HoursSquare FeetMaintenance Department$ 2,300657800Security Department3,00040600Cutting Department19,600203,7003,200Sewing Department20,800185,5504,000

Using the sequential method and allocating the support department with the highest costs first, allocate all support department costs to the production departments. Then compute the total cost of each production department.

Cutting

DepartmentSewing

DepartmentProduction departments total costs$fill in the blank 1

$fill in the blank 2

7.Support department cost allocationdirect method

Becker Tabletops has two support departments (Janitorial and Cafeteria) and two production departments (Cutting and Assembly). Relevant details for these departments are as follows:

Support DepartmentCost DriverJanitorial DepartmentSquare footage to be servicedCafeteria DepartmentNumber of employees

Janitorial

DepartmentCafeteria

DepartmentCutting

DepartmentAssembly

DepartmentDepartment costs$300,000$170,000$1,480,000$700,000Square feet504,8009002,100Number of employees1023515

Allocate the support department costs to the production departments using the direct method.

Cutting

DepartmentAssembly

DepartmentJanitorial Department cost allocation$fill in the blank 1

$fill in the blank 2

Cafeteria Department cost allocation$fill in the blank 3

$fill in the blank 4

8.Support department cost allocation

Blue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and Framing production departments are supported by the Janitorial and Security departments. Janitorial costs are allocated to the production departments based on square feet, and security costs are allocated based on asset value. Information about these departments is detailed in the following table:

Janitorial

DepartmentSecurity

DepartmentPrinting

DepartmentFraming

DepartmentSquare feet7601,0404,2304,770Asset value$900$1,240$12,390$8,610Department cost$5,200$6,600$33,000$29,000

Management has experimented with different support department cost allocation methods in the past. The different allocation methods did not yield large differences of cost allocation to the production departments.

1.Determine which support department cost allocation method Blue Mountain Masterpieces would most likely use to allocate its support department costs to the production departments.

a. Direct cost allocation method.

b. Sequential cost allocation method.

c. Reciprocal cost allocation method.

d. None of the above.

2.Determine the total costs allocated from each support department to each production department using the method you determined in part (1).

Printing

DepartmentFraming

DepartmentJanitorial Department cost allocation$fill in the blank 2

$fill in the blank 3

Security Department cost allocation$fill in the blank 4

$fill in the blank 5

3a.Identify the department that gets higher cost due to square feet based cost allocation.

a. Janitorial department

b. Security department

c. Printing department

d. Framing department

3b.Identify the department that gets higher costs due to asset value-based cost allocation.

a. Janitorial department

b. Security department

c. Printing department

d. Framing department

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting For Managers

Authors: Eric Noreen

1st Edition

73526975, 978-0073526973

More Books

Students also viewed these Accounting questions