A manufacturing company has two service departments, Custodial Services and Maintenance, and three production departments, Cutting, Milling, and Assembly. The company allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow: Custodial Services Maintenance Cutting Milling Assembly Budgeted costs before allocation Square feet $20,000 2,000 $ 12,000 $ 120.000 $75,000 $135,000 20,000 10,000 44,000 26,000 Labor hours 4,000 8,000 8,000 a. Calculate the Custodial Services cost that would be allocated to Assembly Department by the direct method. O None of the answers listed O $8,000 O $11,000 O $5,200 O $6,500 b. Calculate the total cost of Assembly Department if the company uses the step-down method rather than the direct method. Assume that the company allocates Custodial Services cost first. O $146,200 O $145,000 O $146,600 O $148,200 ONen n of th anc nre lintod
A manufacturing company has two service departments, Custodial Services and Maintenance, and three production departments, Cutting, Milling, and Assembly. The company allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow: Custodial Services Maintenance Cutting Milling Assembly Budgeted costs before allocation Square feet $20,000 2,000 $ 12,000 $ 120.000 $75,000 $135,000 20,000 10,000 44,000 26,000 Labor hours 4,000 8,000 8,000 a. Calculate the Custodial Services cost that would be allocated to Assembly Department by the direct method. O None of the answers listed O $8,000 O $11,000 O $5,200 O $6,500 b. Calculate the total cost of Assembly Department if the company uses the step-down method rather than the direct method. Assume that the company allocates Custodial Services cost first. O $146,200 O $145,000 O $146,600 O $148,200 ONen n of th anc nre lintod
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 6E: Eclipse Motor Company manufactures two types of specialty electric motors, a commercial motor and a...
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