The Merchant Manufacturing Company has two service departments — purchasing and maintenance, and two production departments — fabrication and assembly. The distribution of each service department's efforts to the other departments is shown below: FROM TO Purchasing Maintenance Fabrication Assembly Purchasing 0 % 60 % 10 % 30 % Maintenance 20 % 0 % 30 % 50 %
The Merchant Manufacturing Company has two service departments — purchasing and maintenance, and two production departments — fabrication and assembly. The distribution of each service department's efforts to the other departments is shown below: FROM TO Purchasing Maintenance Fabrication Assembly Purchasing 0 % 60 % 10 % 30 % Maintenance 20 % 0 % 30 % 50 %
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 1BE: Charlies Wood Works produces wood products (e.g., cabinets, tables, picture frames, and so on)....
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The Merchant Manufacturing Company has two service departments — purchasing and maintenance, and two production departments — fabrication and assembly. The distribution of each service department's efforts to the other departments is shown below:
FROM | TO | |||||||||||
Purchasing | Maintenance | Fabrication | Assembly | |||||||||
Purchasing | 0 | % | 60 | % | 10 | % | 30 | % | ||||
Maintenance | 20 | % | 0 | % | 30 | % | 50 | % | ||||
The direct operating costs of the departments (including both variable and fixed costs) were as follows:
Purchasing | $ | 96,000 | |
Maintenance | 18,000 | ||
Fabrication | 72,000 | ||
Assembly | 48,000 | ||
The total cost accumulated in the fabrication department using the step method is (assume the purchasing department goes first; calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar):
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