Using the Direct Method, allocate Wedgewood support costs to candle production lines Use the following information to allocate Wedgewood support costs Cost of Support Departments Sales Support Financial Support $400,000 $375,000 Cost Drivers for Support Departments Financial Sales Support Support Staff Hours Payroll Sales Support NA $300,000 Financial Support 1,000 NA Standard Line 6,000 $401,250 Specialty Line 9,000 $ 214,500 Using the Direct Method, allocate Wedgewood support costs to candle production lines 1) Summarize total support costs From WS 1 Sales Support Financial Support Total Service Overhead $400,000 $375,000 $775,000 $775,000 2) Calculate total drivers and the driver usage by each department as a percentage of the total drivers used by each candle production line Sales Support Staff Hours Percentage Drivers Used (WS1) Standard Line Specialty Line Total Drivers Used 6,000 9,000 15,000 15,000 40% 60% 100% 100% Financial Support Payroll Percentage Expenses $401,250 65% $ 214,500 35% 615,750 100% $615,750 100% 3) Allocate support costs to each candle production line by percentage of drivers Sales Financial Support Support $400,000 $375,000 Total Support Costs Allocated $775,000 $775,000 Total To Be Allocated Standard Line Specialty Line Total Costs $404,367 $370,633 $775,000 The following provides the grading criteria for Sheet 2 WS 2 of this workbook will be graded using the following criteria. (15 total pts.) a. Cells orange should have no manual data input except for Excel formulas or data references to/from other cells in the workbook. Cells in green may accept manual data input (3 pts) b. All cells should have proper report formatting. Cells with dollars should be formatted with the $ prefix.. Cells with dollars and cents should have the dollars and cents format ($00.00). (3 pts) Using the Direct Method, compute the total cost (product costs + support costs) for making a Wedgewood standard 4 inch candle. 4) Assume that Wedgewood produced 7,500,000 candle inches of the standard candles with total production costs of $7,553,681. What is the full cost of a four-inch candle under the direct allocation method? Total Production Costs Total Service Costs (Assigned from WS 2) Full Costs $1.06 Standard Candles Produced 1 Full Cost/Inch 2. 3 Inches in Standard Candle 4 Full Cost of a Standard 4 Inch Candle $4.24 5 7 3 The following provides the grading criteria for Sheet 2 3 2 3 WS 3 of this workbook will be graded using the following criteria. (15 total pts.) a. Cells orange should have no manual data input except for Excel formulas or data references to/from other cells in the workbook. Cells in green may accept manual data input (3 pts) b. All cells should have proper report formatting. Cells with dollars should be formatted with the $ prefix.. Cells with dollars and cents should have the dollars and cents format ($00.00). (3 pts) c. Properly complete instructions & computations for allocating service departments to production lines (9 pts) 4 3 2
