Potter & Weasley Company had the following activities, estimated indirect activity costs, and allocation bases: Activities Indirect Activity Costs Allocation Base Account inquiry (hours) $85,700 2600 Account billing (lines) $55,000 35,000 Account verification (accounts) $40,250 27,500 Correspondence (letters) $80,000 12,000Potter & Weasley uses activity based costing.
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| Activities | Indirect Activity Costs | Allocation Base |
| Account inquiry (hours) | $85,700 | 2600 |
| Account billing (lines) | $55,000 | 35,000 |
| Account verification (accounts) | $40,250 | 27,500 |
| Correspondence (letters) | $80,000 | 12,000 |
The above activities are used by Departments P and Q as follows:
| | Department P | Department Q |
| Account inquiry (hours) | 200 | 1000 |
| Account billing (lines) | 10,000 | 4,000 |
| Account verification (accounts) | 6,000 | 7,000 |
| Correspondence (letters) | 1,000 | 2,000 |
Question 15 options:
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$1318
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$32,962
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$6592
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$13,000
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- Bell, Biv, and Devoe Company had the following activities, estimated indirect activity costs, and allocation bases: Activities Indirect Activity Costs Allocation Base Account inquiry (hours) $85,200 2,200 Account billing (lines) $55,000 34,000 Account verification (accounts) $39,250 25,500 Correspondence (letters) $71,000 9,000 The company uses activity-based costing. The above activities are used by Departments P and Q as follows: Department P Department Q Account inquiry (hours) 400 800 Account billing (lines) 10,000 4,000 Account verification (accounts) 6,000 7,000 Correspondence (letters) 1,000 2,000 What is the cost per driver unit for the account inquiry activity? (Round all answers to two decimal places.) $1.62 $9.47 $7.89 $38.73Cancico Communications has supplied the following data for use in its ABC system: Overhead Costs Wages and salaries $ 292,500 Other overhead costs 162,000 Total overhead costs $ 454,500 Activity Cost Pool Activity Measure Total Activity Direct labour support Number of direct labour-hours 12,015 DLHs Order processing Number of orders 450 orders Customer support Number of customers 150 customers Other These costs are not allocated to products or customers NA Distribution of Resource Consumption across Activity Cost Pools Direct Labour Support Order Processing Customer Support Other Total Wages and salaries 15 % 40 % 35 % 10 % 100 % Other overhead costs 10 % 25 % 25 % 40 % 100 % During the year, Cancico Communications completed an order for special telephone equipment for a new customer, HurnTel. This customer did not order any other products during the year. Data concerning that order follow:…Management of XYZ Media has decided to allocate the costs of the paper's two service/support departments (administration and human resources) to the two revenue generating/producing departments (advertising and circulation.) Administration costs are to be allocated on the Pesos of Assets Employed. ; Human Resources costs are to be allocated on the basis of Number of Employees. The following costs and allocated bases are available. (Convert the fractions on the allocated bases into percentages rounded to the whole number). Department - Administration: Direct Costs - P781,500 Number of Employees - 10 Pesos of Assets Employed - P387,100 Department - Human Resources: Direct Costs - P492,700 Number of Employees - 7 Pesos of Assets Employed - P291,700 Department - Advertising: Direct Costs - P957,800 Number of Employees - 12 Pesos of Assets Employed - P762,400 Department - Circulation: Direct Costs - P1,352,600 Number of Employees - 25 Pesos of Assets Employed - P1,870,300…
- BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting domestic International Employees – 21 36 43 Transactions 32,000 – 21,000 84,000 Department direct costs 360,000 140,000 $ 935,000 $ 3,730,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method.b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration.c. Allocate the cost of the service departments to the operating departments using the reciprocal method.Management Accounting Company B is interested in using the reciprocal allocation method. The following data from operations were collected for analysis: Budgeted manufacturing overhead costs: Plant Maintenance PM (Support Dept) $350,000 Data Processing DP (Support Dept) $75,000 Machining M (Operating Dept) $225,000 Capping C (Operating Dept) $125,000 Services furnished: By Plant Maintenance (budgeted labour-hours): to Data Processing 3,500 to Machining 5,000 to Capping 8,200 By Data Processing (budgeted computer time): to Plant Maintenance 600 to Machining 3,500 to Capping 600 Required : a. What is the complete reciprocated cost of the Plant Maintenance Department? b. What is the complete reciprocated cost of the Data Processing Department? c. "The direct allocation method incorporates mutual services provided among all support departments."…Sterling Archer Spy Agency provides independent intelligence gathering services. The agency has the following data concerning its overhead costs and its activity-based costing system: Overhead costs: Wages and salaries $400,000 Administrative expenses 150,000 Total $550,000 Distribution of resource consumption: Activity Cost Pools Intelligence Report procurement Writeups Other Total Wages and salaries 70% 25% 5% 100% Administrative expenses…
- Management at C. Pier Press has decided to allocate costs of the paper’s two support departments (administration and human resources) to the two revenue-generating departments (advertising and circulation). Administration costs are to be allocated on the basis of dollars of assets employed; human resources costs are to be allocated on the basis of number of employees. The following costs and allocation bases are available: Department Direct Costs Number of Employees Assets Employeed Administration $1,094,100 14 $541,940 Human resources 689,780 11 408,380 Advertising 1,340,920 17 1,067,360 Circulation 1,893,640 36 2,618,420 Totals $5,018,440 78 $4,636,100 a. Using the direct method, allocate the support department costs to the revenue-generating departments. Amount allocated to Advertising: $______ Amount allocated to Circulation: $______ b. Using your answer to (a), what are the total costs of the revenue-generating departments after the allocations? Advertising total…Freezo Proprietary Limited has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of 12,163 are allocated on the basis of standard service used. The Personnel Department costs of 3,745 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are R9 000 and R15 000, respectively. Data on standard service hours and number of employees are as follows: MD PD P1 P2 Standard service hours 100 50 325 176 Number of employees 10 20 148 101 Direct labour hours 50 50 250 250 Using the direct method, calculate the cost of the support departments allocated to Department P1.Senen corporation has two service departments (maintenance and security) and two producing departments (assembly and finising). The following are the percentage usage of each department use of maintenance dept use of security dept Maintenance 5 % Security 10 % Assembly 60 % 40 % Finishing 30 % 55 % The maintenance department cost is 900,000 and security department cost is 500,000 Compute the service cost allocated tosecurity department using reciprocal method
- Marks Corporation has two operating departments, Drilling and Grinding, and an office. The three categories of office expenses are allocated to the two operating departments using different allocation bases. The following information is available for the current period: Office Expenses Total Allocation Base Salaries $ 30,000 Number of employees Depreciation 20,000 Cost of goods sold Advertising 40,000 Percentage of total sales Department Number of employees Sales Cost of goods sold Drilling 1,000 $ 325,000 $ 75,000 Grinding 1,500 475,000 125,000 Total 2,500 $ 800,000 $ 200,000 The amount of salaries that should be allocated to Grinding for the current period is:Advanced Products Corporation has supplied the following data from its activity-based costing system: Overhead Costs Wages and salaries $ 300,000 Other overhead costs 100,000 Total overhead costs $ 400,000 Activity Cost Pool Activity Measure Total Activity for the Year Supporting direct labor Number of direct labor-hours 20,000 DLHs Order processing Number of customer orders 400 orders Customer support Number of customers 200 customers Other This is an organization-sustaining activity Not applicable Distribution of Resource Consumption Across Activities Supporting Direct Labor Order Processing Customer Support Other Total Wages and salaries 40 % 30 % 20 % 10 % 100 % Other overhead costs 30 % 10 % 20 % 40 % 100 % During the year, Advanced Products completed one order for a new customer, Shenzhen Enterprises. This customer did not order any other products during the year. Data concerning that order follow: Data…Poskey Corporation uses an activity-based costing system with three activity cost pools. The company has provided the following data concerning its costs and its activity based costing system:Costs:Wages and salaries ............ $400,000Depreciation ...................... 160,000Utilities .............................. 100,000Total ................................... $660,000Distribution of resource consumption:Activity Cost Pools Assembly Setting Up Other TotalWages and salaries .............. 40% 40% 20% 100%Depreciation ........................ 20% 35% 45% 100%Utilities ................................ 25% 55% 20% 100%How much cost, in total, would be allocated in the first-stage allocation to the Assembly activity cost pool?
