Perfection Department Store has a new promotional program that offers a free gift-wrapping service for its customers. Perfection's customer-service department has practical capacity to wrap 7,500 gifts at a budgeted fixed cost of $6,750 each month. The budgeted variable cost to gift wrap an item is $0.30. During the most recent month, the department budgeted to wrap 6,750 gifts. Although the service is free to customers, a gift-wrapping service cost allocation is made to the department where the item was purchased. The customer-service department reported the following for the most recent month: E (Click the icon to view the actual and b Read the requirements. Requirements Data Table %3 Requirement 1. Using the single-rate meth Start with allocating (a), then (b), and finally 1. Using the single-rate method, allocate gift-wrapping costs to different departments in these three ways. A B (a) Calculate the budgeted rate based on the budgeted number of gifts to be wrapped and allocate costs based on the budgeted use (of gift-wrapping services). b. Calculate the budgeted rate based on the budgeted number of gifts to be wrapped and allocate costs based on actual usage. c. Calculate the budgeted rate based on the practical gift-wrapping capacity available and allocate costs based on actual usage. a. Budgeted Items Actual Items Wrapped Budgeted rate per item: Department Wrapped 2 Giftware 2,490 2,200 Giftware 3 Women's Apparel 810 710 Women's Apparel 4 Fragrances 1,815 1,595 500 Fragrances 2. Using the dual-rate method, compute the amount allocated to each department when (a) the fixed-cost rate is calculated using budgeted costs and the practical gift-wrapping capacity, (b) fixed costs are allocated based on budgeted usage of gift-wrapping services, and (c) variable costs are allocated using the budgeted variable-cost rate and actual usage. 5 Men's Apparel 465 Enter any number in the edit fields and th 6 Domestics 1,170 1,345 7 Total 6,750 6,350 parts remaining 3. Comment on your results in requirements 1 and 2. Discuss the advantages of the dual-rate method.
Perfection Department Store has a new promotional program that offers a free gift-wrapping service for its customers. Perfection's customer-service department has practical capacity to wrap 7,500 gifts at a budgeted fixed cost of $6,750 each month. The budgeted variable cost to gift wrap an item is $0.30. During the most recent month, the department budgeted to wrap 6,750 gifts. Although the service is free to customers, a gift-wrapping service cost allocation is made to the department where the item was purchased. The customer-service department reported the following for the most recent month: E (Click the icon to view the actual and b Read the requirements. Requirements Data Table %3 Requirement 1. Using the single-rate meth Start with allocating (a), then (b), and finally 1. Using the single-rate method, allocate gift-wrapping costs to different departments in these three ways. A B (a) Calculate the budgeted rate based on the budgeted number of gifts to be wrapped and allocate costs based on the budgeted use (of gift-wrapping services). b. Calculate the budgeted rate based on the budgeted number of gifts to be wrapped and allocate costs based on actual usage. c. Calculate the budgeted rate based on the practical gift-wrapping capacity available and allocate costs based on actual usage. a. Budgeted Items Actual Items Wrapped Budgeted rate per item: Department Wrapped 2 Giftware 2,490 2,200 Giftware 3 Women's Apparel 810 710 Women's Apparel 4 Fragrances 1,815 1,595 500 Fragrances 2. Using the dual-rate method, compute the amount allocated to each department when (a) the fixed-cost rate is calculated using budgeted costs and the practical gift-wrapping capacity, (b) fixed costs are allocated based on budgeted usage of gift-wrapping services, and (c) variable costs are allocated using the budgeted variable-cost rate and actual usage. 5 Men's Apparel 465 Enter any number in the edit fields and th 6 Domestics 1,170 1,345 7 Total 6,750 6,350 parts remaining 3. Comment on your results in requirements 1 and 2. Discuss the advantages of the dual-rate method.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter8: Budgeting For Planning And Control
Section: Chapter Questions
Problem 6CE: Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following...
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