Question
Tampa Instrument Company manufactures gauges for construction machinery. The company has two production departments: Machining and Assembly. There are three service departments: Maintenance, Human Resources
Tampa Instrument Company manufactures gauges for construction machinery. The company has two production departments: Machining and Assembly. There are three service departments: Maintenance, Human Resources (HR), and Computer Aided Design (CAD). The usage of these service departments output during the year just completed is as follows:
Provision of Service Output (in hours of service) | |||||||||||
Provider of Service | |||||||||||
User of Service | HR | Maintenance | CAD | ||||||||
HR | |||||||||||
Maintenance | 1,000 | ||||||||||
CAD | 1,000 | 1,000 | |||||||||
Machining | 2,000 | 2,500 | 4,000 | ||||||||
Assembly | 4,000 | 3,500 | 2,000 | ||||||||
Total | 8,000 | 7,000 | 6,000 | ||||||||
The budgeted costs in Tampa Instrument Companys service departments during the year are as follows:
HR | Maintenance | CAD | |||||||||
Variable | $ | 66,000 | $ | 89,000 | $ | 66,000 | |||||
Fixed | 280,000 | 192,500 | 390,000 | ||||||||
Total | $ | 346,000 | $ | 281,500 | $ | 456,000 | |||||
When Tampa Instrument Company established its service departments, the following long-run needs were anticipated.
Long-Run Service Needs (in hours of service) | |||||||||||
Provider of Service | |||||||||||
User of Service | HR | Maintenance | CAD | ||||||||
HR | |||||||||||
Maintenance | 500 | ||||||||||
CAD | 2,000 | 1,000 | |||||||||
Machining | 2,500 | 3,500 | 4,800 | ||||||||
Assembly | 3,000 | 2,500 | 1,200 | ||||||||
Total | 8,000 | 7,000 | 6,000 | ||||||||
Required:
Use dual cost allocation in conjunction with each of the following methods to allocate Tampa Instrument Companys service department costs: (1) direct method and (2) step-down method.
- 1. Direct method combined with dual allocation.
- a. Variable costs
- b. Fixed costs
- c. Total costs allocated
1-Direct method combined with dual allocation for variable costs. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)
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2-Direct method combined with dual allocation for fixed costs. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)
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Direct method combined with dual allocation for total costs allocated. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)
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