12. The Thomas Company has two service departments and two operating departments. The following data are available for a recent period: Cafeteria Overhead costs . $80,000 Service Departments Custodial $60,000 Operating Departments Assembly $75,000 Finishing $86,500 Number of .. 30 employees. Square feet occupied.. 18,000 Thomas allocates service department costs by the step method in the following order: Cafeteria costs are allocated first, based on number of employees; Custodial Department costs are allocated second, based on square feet occupied. No distinction is made between fixed and variable costs. After all allocations, total amount of overhead cost contained in the Finishing Department will be: A) $156,800 B) $151,300 C) $154,600 D) $138,450 E) None of above. 60 360 180 25,000 60,000 90,000

12. The Thomas Company has two service departments and two operating departments. The following data are available for a recent period: Cafeteria Overhead costs . $80,000 Service Departments Custodial $60,000 Operating Departments Assembly $75,000 Finishing $86,500 Number of .. 30 employees. Square feet occupied.. 18,000 Thomas allocates service department costs by the step method in the following order: Cafeteria costs are allocated first, based on number of employees; Custodial Department costs are allocated second, based on square feet occupied. No distinction is made between fixed and variable costs. After all allocations, total amount of overhead cost contained in the Finishing Department will be: A) $156,800 B) $151,300 C) $154,600 D) $138,450 E) None of above. 60 360 180 25,000 60,000 90,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...

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Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?
Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Refer to Exercise 2.21. Last calendar year, Ellerson recognized revenue of 1,312,000 and had selling and administrative expenses of 204,600. Required: 1. What is the cost of goods sold for last year? 2. Prepare an income statement for Ellerson for last year.
Evans Company had total sales of 3,000,000 for fiscal 20x5. The costs of quality-related activities are given below. Required: 1. Prepare a quality cost report, classifying costs by category and expressing each category as a percentage of sales. What message does the cost report provide? 2. Prepare a bar graph and pie chart that illustrate each categorys contribution to total quality costs. Comment on the significance of the distribution. 3. What if, five years from now, quality costs are 7.5 percent of sales, with control costs being 65 percent of the total quality costs? What would your conclusion be?
Minor Co. has a job order cost system and applies overhead based on departmental rates. Service Department 1 has total budgeted costs of 168,000 for next year. Service Department 2 has total budgeted costs of 280,000 for next year. Minor allocates service department costs solely to the producing departments. Service Department 1 cost is allocated to producing departments on the basis of machine hours. Service Department 2 cost is allocated to producing departments on the basis of direct labor hours. Producing Department 1 has budgeted 8,000 machine hours and 12,000 direct labor hours. Producing Department 2 has budgeted 2,000 machine hours and 12,000 direct labor hours. What is the total cost allocation from the two service departments to Producing Department 1? a. 173,600 b. 140,000 c. 134,400 d. 274,400
A production department within a company received materials of $10,000 and conversion costs of $10,000 from the prior department. It added material of $27,200 and conversion costs of $53,000. The equivalent units are 20,000 for material and 18,000 for conversion. What is the unit cost for materials and conversion?
Alard Manufacturing Company has a billing department staffed by four billing clerks. Each clerk is paid 32,000 per year and is able to process 8,000 bills. Last year, 27,360 bills were processed by the four agents. Calculate the unused capacity in terms of number of bills. a. 27,360 b. 4,640 c. 8,000 d. 32,000
Hart Manufacturing makes three products. Each product requires manufacturing operations in three departments: A, B, and C. The labor-hour requirements, by department, are as follows: During the next production period the labor-hours available are 450 in department A, 350 in department B, and 50 in department C. The profit contributions per unit are 25 for product 1, 28 for product 2, and 30 for product 3. a. Formulate a linear programming model for maximizing total profit contribution. b. Solve the linear program formulated in part (a). How much of each product should be produced, and what is the projected total profit contribution? c. After evaluating the solution obtained in part (b), one of the production supervisors noted that production setup costs had not been taken into account. She noted that setup costs are 400 for product 1, 550 for product 2, and 600 for product 3. If the solution developed in part (b) is to be used, what is the total profit contribution after taking into account the setup costs? d. Management realized that the optimal product mix, taking setup costs into account, might be different from the one recommended in part (b). Formulate a mixed-integer linear program that takes setup costs provided in part (c) into account. Management also stated that we should not consider making more than 175 units of product 1, 150 units of product 2, or 140 units of product 3. e. Solve the mixed-integer linear program formulated in part (d). How much of each product should be produced and what is the projected total profit contribution? Compare this profit contribution to that obtained in part (c).
A company estimates its manufacturing overhead will be $840,000 for the next year. What is the predetermined overhead rate given each of the following Independent allocation bases? Budgeted direct labor hours: 90,615 Budgeted direct labor expense: $750000 Estimated machine hours: 150,000
Westmore Company has two service departments and two operating departments. Budgeted costs and other data relating to these departments are presented below:Building Operating Department& Grounds Personnel A BDepartmental costs ..... $54,000 $200,000 $650,000 $800,000Square feet occupied ... 1,000 3,000 12,000 15,000Number of employees .... 10 5 45 55Direct laborhours ..... 76,000 92,000The costs of Building & Grounds are allocated first on the basis of square feet of space occupied. Personnel costs are allocated on the basis of numberof employees. The departmental costs for the operating departments are overhead costs. Predetermined overhead rates in the operating departments are computed on the basis of direct laborhours.Assume that the company uses the direct method of allocating service department costs. The predetermined overhead rate that would be used in Department B would be closest to:a. $11.50/DLH.b. $12.00/DLH.c. $10.00/DLH.d. $10.22/DLH.
Parker Company has two service departments, Cafeteria and Engineering, and two operating departments. The number of employees in each department is given below: Cafeteria 10 Engineering 40 Operating Department 1 500 Operating Department 2 200 The company uses the step method to allocate service department cost. Cafeteria is allocated first, and then Engineering. The costs of the Cafeteria are allocated to other departments on the basis of number of employees in the departments. If Cafeteria costs are budgeted at R69 375, the amount of cost allocated to Operating Department 2 would be closest to: A. R18 500 B. R18 750 C. R19 821 D. R46 875
Guna publishing company has three service departments & two operating departments. Selected data from a recent period on five departments as follows: Cost type Service Departments Operating departments Total A B C 1 2 Overhead costs $140,000 $105,000 $48,000 $275,000 $430,000 $998,000 Number of employees 60 35 140 315 210 760 Space occupied 15,000 10,000 20,000 40,000 100,000 185,000 Hours of press time - - - 30,000 60,000 90,000 The company allocated service department costs by the step method in the following order. A (number of employees). B (Space occupied), & C (hours of press time). The company makes no distinction between variable & fixed service department costs. Required: 1) Assuming that the company used the direct method, how much overhead cost would be allocated to each operating departments? 2) Using the step method, allocate the service department costs to the…
Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT Accounting HR West East IT -- 0% 20% 40% 40% Accounting 0% -- 0% 40% 60% HR 10% 10% -- 60% 20% The direct costs of the service departments in the previous period were $91,000 for IT, $116,000 for Accounting, and $155,000 for HR. Required: Use the step method to allocate the service department costs to the two production departments. Allocate HR costs first, followed by IT, and then Accounting. Note: Amounts to be deducted should be indicated by a minus sign. IT Accounting HR West East Service department costs $ 0 HR allocation IT allocation Accounting allocation Total costs allocated $ 0 $ 0 $ 0 $ 0 $ 0 Need help please