University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. The following data appear in the company records for the current period: Maintenance Personnel Printing Developing Machine-hours 1,300 1,300 3,700 Labor-hours 900 900 2,700 Department direct costs $ 21,000 $ 40,000 $ 52,000 $ 37,000 Required: Use the direct method to allocate these service department costs to the operating departments. (Do not round intermediate calculations.) ----------------------------------------------- University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. The following data appear in the company records for the current period: Maintenance Personnel Printing Developing Machine-hours 2,000 2,000 4,000 Labor-hours 600 600 2,600 Department direct costs $ 24,000 $ 46,000 $ 55,000 $ 40,000 Required: Allocate the service department costs using the step method, starting with the Maintenance Department. (Do not round intermediate calculations.) ----------------------------------------- University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. The following data appear in the company records for the current period: Maintenance Personnel Printing Developing Machine-hours 765 720 3,015 Labor-hours 260 280 1,460 Department direct costs $ 11,000 $ 23,000 $ 32,000 $ 22,000 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) ------------------------------------------------------------------- Blasto, Inc., operates several mines. At one, a typical batch of ore run through the plant yields three products: lead, copper, and manganese. At the split-off point, the intermediate products cannot be sold without further processing. The lead from a typical batch sells for $125,000 after incurring additional processing costs of $63,000. The copper is sold for $165,000 after additional processing costs of $10,000, and the manganese yield sells for $145,000 but requires additional processing costs of $52,000. The joint costs of processing the raw ore, including the cost of mining, are $270,000 per batch. Required: Use the estimated net realizable value method to allocate the joint processing costs. (Do not round your intermediate calculations.) ------------------------------------------------------------ The following questions relate to Kyle Company, which manufactures products KA, KB, and KC from a joint process. Joint product costs were $116,000. Additional information follows: If Processed Further Product Units Produced Sales Value at Split-Off Sales Values Additional Costs KA 59,000 $ 140,000 $ 220,000 $ 32,000 KB 44,000 150,000 200,000 30,000 KC 14,000 120,000 140,000 20,000 Required: (a) Assuming that joint product costs are allocated using the physical quantities (units produced) method, what was the total cost of product KA (including $32,000 if processed further)? (Do not round your intermediate calculations. Round your answer to the nearest dollar amount.) (b) Assuming that joint product costs are allocated using the sales value at split-off (net realizable value method), what was the total cost of product KB (including the $30,000 if processed further)? (Do not round your intermediate calculations. Round your answer to the nearest dollar amount.) ----------------------------------------------------------------- Manzano Bank has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During November, the following costs and service department usage ratios were recorded: Using Department Supplying Department Processing Administration Maintenance Branches Electronic Processing 0 60 % 0 20 % 20 % Administration 0 0 0 60 % 40 % Maintenance 15 % 15 % 0 20 % 50 % Direct cost $ 280,000 $ 590,000 $ 170,000 $ 4,400,000 $ 650,000 Required: (a) Allocate the service department costs to the two operating departments using the reciprocal method. ------------------------------------------------ Manzano Bank has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During November, the following costs and service department usage ratios were recorded: Using Department Supplying Department Processing Administration Maintenance Branches Electronic Processing 0 50 % 0 10 % 40 % Administration 0 0 0 60 % 40 % Maintenance 10 % 20 % 0 20 % 50 % Direct cost $ 116,000 $749,000 $326,000 $ 6,100,000 $ 2,200,000 The cost accountant at Manzano Bank estimates that the cost structures in their departments are as follows: Ads by Wander BurstAd Options Processing Administration Maintenance Branches Electronic Variable costs $ 75,000 $ 243,000 $ 177,000 $ 2,400,000 $ 1,150,000 Fixed costs 41,000 506,000 149,000 3,700,000 1,050,000 Total costs $ 116,000 $ 749,000 $ 326,000 $ 6,100,000 $ 2,200,000 Avoidable fixed costs $ 15,000 $ 397,000 $ 122,000 $ 2,090,000 $ 900,000 Required: (a) If Manzano outsources the Processing Department, what is the maximum they can pay an outside vendor without increasing total costs? (b) If Manzano outsources the Administration Department, what is the maximum they can pay an outside vendor without increasing total costs? (c) If Manzano outsources the Maintenance Department, what is the maximum they can pay an outside vendor without increasing total costs? --------------------------------------------- Ag-Coop is a large farm cooperative with a number of agriculture-related manufacturing and service divisions. As a cooperative, it pays no federal income taxes. The company owns a fertilizer plant that processes and mixes petrochemical compounds into three brands of agricultural fertilizer: greenup, maintane, and winterizer. The three brands differ with respect to selling price and the proportional content of basic chemicals. Ag-Coops Fertilizer Manufacturing Division transfers the completed product to the cooperatives Retail Sales Division at a price based on the cost of each type of fertilizer plus a markup. The Manufacturing Division is completely automated so that the only costs it incurs are the costs of the petrochemical feedstocks plus overhead that is considered fixed. The primary feedstock costs $1.80 per pound. Each 100 pounds of feedstock can produce either of the following mixtures of fertilizer. Output Schedules (in pounds) A B Greenup 50 70 Maintane 30 10 Winterizer 20 20 Production is limited to the 840,000 kilowatt-hours monthly capacity of the dehydrator. Due to different chemical makeup, each brand of fertilizer requires different dehydrator use. Dehydrator usage in kilowatt-hours per pound of product follows: Product Kilowatt-Hour Usage per Pound Greenup 50 Maintane 38 Winterizer 58 Monthly fixed costs are $70,000. The company currently is producing according to output schedule A. Joint production costs including fixed overhead are allocated to each product on the basis of weight. The fertilizer is packed into 100-pound bags for sale in the cooperatives retail stores. The sales price for each product charged by the cooperatives Retail Sales Division follows: Sales Price per Pound Greenup $ 9.00 Maintane 7.50 Winterizer 8.90 Selling expenses are 20 percent of the sales price. The Retail Sales Division manager has complained that the prices charged by the Manufacturing Division are excessive and that he would prefer to purchase from another supplier. The Manufacturing Division manager argues that the processing mix was determined based on a careful analysis of the costs of each product compared to the prices charged by the Retail Sales Division. Required: (a) Assume that joint production costs including fixed overhead are allocated to each product on the basis of weight. What is the cost per pound of each product, including fixed overhead and the feedstock cost of $1.80 per pound, given the current production schedule? (Do not round your intermediate calculations. Round your answer to 2 decimal places.) (b) Assume that joint production costs including fixed overhead are allocated to each product on the basis of net realizable value if sold through the cooperatives Retail Sales Division. What is the allocated cost per pound of each product, given the current production schedule? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Ads by Wander BurstAd Options (c) Assume that joint production costs including fixed overhead are allocated to each product on the basis of weight. Which of the two production schedules, A or B, produces the higher operating profit to the firm as a whole