The Swifty Company makes wheels and wings for ground transport vehicles and drones. In addition to the key manufacturing departments, Swifty needs two key support services, provided by its Maintenance and IT departments. The Maintenance costs are allocated to other departments based on the square footage of space each department occupies. Th department allocates its costs to other departments based on the amount of time the IT employees spend assisting the other departments. The cost information of all four departments, along with their usage information for both allocation bases, is as fo Initial cost Square feet occupied IT labor hours used (a) Support Departments Maintenance IT $120,000 $87,000 1,300 2,200 900 Operating Departments Wheels Operating Departments Wheels Wings $424,000 $707,000 2,640 2,565 Allocate the support department costs using the direct method to determine the total costs for which each operating depart should be accountable. 6,160 1,935 Wings Totals $1,338,000 12,300 5,400 Total costs
The Swifty Company makes wheels and wings for ground transport vehicles and drones. In addition to the key manufacturing departments, Swifty needs two key support services, provided by its Maintenance and IT departments. The Maintenance costs are allocated to other departments based on the square footage of space each department occupies. Th department allocates its costs to other departments based on the amount of time the IT employees spend assisting the other departments. The cost information of all four departments, along with their usage information for both allocation bases, is as fo Initial cost Square feet occupied IT labor hours used (a) Support Departments Maintenance IT $120,000 $87,000 1,300 2,200 900 Operating Departments Wheels Operating Departments Wheels Wings $424,000 $707,000 2,640 2,565 Allocate the support department costs using the direct method to determine the total costs for which each operating depart should be accountable. 6,160 1,935 Wings Totals $1,338,000 12,300 5,400 Total costs
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 6E: Davis Snowflake Co. produces Christmas stockings in its Cutting and Sewing departments. The...
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