The Merlin Company has two products. Product 1 is manufactured entirely in department X. Product 2 is manufactured entirely in department Y. To produce these two products, the Merlin Company has two support departments: A (a materials-handling department) and B (a power-generating department). An analysis of the work done by departments A and B in a typical period follows. (Click the icon to view analysis of the work done by departments A and B.) The budgeted costs of the support departments for the coming year are as follows. Click the icon to view the budgeted costs of the support departments.) Required A Click the icon to see the Worked Solution. Requirement 1. What are the allocations of costs of support departments A and B to operating departments X and Y using (a) the direct method, (b) the step-down method (allocate department A first). (c) the step-down method (allocate department B first), and (d) the reciprocal method. (a) the direct method Using the direct method, allocate the support-department costs. (Do not round interim calculations, and round your answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs.) A B Y Costs to be allocated Allocate A Allocate B Total The Merlin Company has two products. Product 1 is manufactured entirely in department X. Product 2 is manufactured entirely in department Y. To produce these two products, the Merlin Company has two support departments: A (a materials-handling department) and B (a power-generating department). An analysis of the work done by departments A and B in a typical period follows. (Click the icon to view analysis of the work done by departments A and B.) The budgeted costs of the sup B(Click the icon to view the Analysis of the work done by departments a and B Required Used by i Click the icon to s Supplied by A B Y A 420 630 1,050 500 ct method, (b) the step-down . 3,000 1.500 Requirement 1. What are the method (allocate department (a) the direct method The work done in department Ais measured by the direct labour-hours of materials-handling time. The work done in department B is measured by the kilowatt-hours of power. rest whole dollar. Use Using the direct method, alloca parentheses or a minus sign w Costs to be allocated Print Done Allocate A Allocate B Total - artment Y. To produce these x rtment). An analysis of the Budgeted costs of support departments The Merlin Company has two two products, the Merlin Comp work done by departments A a (Click the icon to view anal The budgeted costs of the sup (Click the icon to view the Required Department A (Materials Handling) Department B (Power Generation) Variable indirect labour and indirect material costs S $ 60,000 Click the icon to s Supervision 324,000 97,200 32,400 100,000 100,000 Depreciation Requirement 1. What are the method (allocate department ct method, (b) the step-down S 453,600 $ 260,000 (a) the direct method + Materials-handling costs + Power costs rest whole dollar. Use Using the direct method, alloca parentheses or a minus sign w The budgeted costs of the operating departments for the coming year are $2,500,000 for department X and $1,900,000 for department Y. Supervision costs are salary costs. Depreciation in department B is the straight-line depreciation of power-generation equipment in its 19th year of an estimated 25-year useful life; it is old, but well maintained, equipment. Costs to be allocated Allocate A Allocate B Total Print Done Homework: Cost allocation - Review 17.04%, 37.63 of 80 points ) of 16 upport departments: A (a materials-handling dep Worked Solution The Merlin Company has two products. Product 1 is manufactured entirely in department X. Product 2 work done by departments A and B in a typical period follows. (Click the icon to view analysis of the work done by departments A and B.) The budgeted costs of the support departments for the coming year are as follows. (Click the icon to view the budgeted costs of the support departments.) Required Requirement 1. Direct Method A costs to allocate Overhead Direct Costs (A) X $ 453.600 Allocation Fraction Costs to allocate $ 283,500 1,050/1,680 i Click the icon to see the Worked Solution. Y $ 453,600 630/1,680 $ 170,100 B costs to allocate Overhead Direct Costs (B) Requirement 1. What are the allocations of costs of support departments A and B to operating departn (a) the direct method step-down method (allocate department B first), Costs to allocate Allocation Fraction $ 260,000 $ 65,000 Using the direct method, allocate the support-department costs. (Do not round interim calculations, and 500/2,000 1,500/2,000 partments by allocating costs.) Y $ 260,000 $ 195,000 A B Y Costs to be allocated Step-down method (allocate department A first) Allocate A A Allocate B B = $453,600 x 630 / 2,100 = $136,080 X = $453,600 x 420/2,100 = $90,720 Y = $453,600 x 1,050 /2,100 = $226,800 Total B Costs to allocate Step-down Overhead Costs (B) X Allocation Fraction $ 350.720 x 500/2,000 $ 350.720 x 1,500/2,000 S 87.680 Y $ 263,040 Step-down method (allocate department B first) B Done ACCT 3228 Fall 2021 = Homework: Cost allocation Review x 7.04%, 37.63 of 80 point of 16 JUV,TZU upport departments: A (ar 1,JUIZ, vvv ZUJU Step-down method (allocate department B first) The Merlin Company has two products. Product 1 is manufactured entirely in department X. Product 2 work done by departments A and B in a typical period follows. (Click the icon to view analysis of the work done by departments A and B.) The budgeted costs of the support departments for the coming year are as follows. E (Click the icon to view the budgeted costs of the support departments.) Required B A = $260,000 x 3,000 75,000 = $156,000 X = $260,000 x 500/5,000 = $26,000 Y = $260,000 x 1,500 75,000 = $78,000 i Click the icon to see the Worked Solution. Step-down Overhead Costs (B) x Allocation Fraction $ 609,600 x 1,050/1,680 $ 609.600 x 630/1,680 Costs to allocate S 381,000 $ 228,600 Y step-down method (alloca Requirement 1. What are the allocations of costs of support departments A and B to operating departn (a) the direct method Using the direct method, allocate the support-department costs. (Do not round interim calculations, and partments by allocating cos A B X Y Reciprocal method (use the linear equation method) Material handling Total direct labour- time used by the hours of materials- Step-down department 1 handling time B 420 1 2.100 Kilowatt hours used by the department Total kilowatt hours = A 3,000 1 5,000 Costs to be allocated Allocation percentage 20 % Allocation percentage Allocate A Allocate B 60 % Total 453,600 + 0.20 B A = $ B = $ 260,000 0.60 A = $453,600 + (0.6($260,000 +0.2 x A)] A = $609,600+ 0.12A A = $609,600 / 0.88 = $692.727 B= $ 0.20 x $ 692,727) 260,000 + 398,545 B = $ Done Homework: Cost allocation - Review x 7.04%, 37.63 of 80 points of 16 upport departments: A (a materials-handling depar Step-down The Merlin Company has two products. Product 1 is manufactured entirely in department X. Product 2 work done by departments A and B in a typical period follows. E: (Click the icon to view analysis of the work done by departments A and B.) The budgeted costs of the support departments for the coming year are as follows. (Click the icon to view the budgeted costs of the support departments.) Required Overhead Costs (B) X Allocation Fraction $ 609,600 x 1,050/1,680 $ 609,600 x 630/1,680 Costs to allocate S 381,000 S 228,600 Y i Click the icon to see the Worked Solution. Reciprocal method (use the linear equation method) Material handling Total direct labour- time used by the hours of materials Step-down department / handling time 420 / 2.100 Kilowatt hours used by the department Total kilowatt hours = . 3,000 1 5,000 Allocation percentage 20 % Allocation percentage 60 % step-down method (allocate department B first), a Requirement 1. What are the allocations of costs of support departments A and B to operating departn (a) the direct method II Using the direct method, allocate the support-department costs. (Do not round interim calculations, and + 0.20 partments by allocating costs.) B A = $ 453,600 B = $ 260,000 A B Y 0.60 A Costs to be allocated Allocate A A = $453,600 + [0.6($260,000 +0.2 x A)] A = $609,600 +0.12A A = 5609,600 / 0.88 = $692,727 Allocate B B = $ Total 0.20 x $ 692.727) 260.000 + 398,545 B = $ Allocation of A costs: B: $692,727 x 420/2,100 = $138,545 X: $692,727 x 1,050/2,100 = $346,364 Y: $692,727 x 630/2,100 = $207,818 Allocation of B costs: A: $398,545 x 3,000/5,000 = $239,127 X: $398,545 x 500/5,000 = $39,855 Y: $398,545 x 1,500/5,000 = $119,564 Done