Virgin River Inc. produces horse and rancher equipment. Costs from Support Department 1 are allocated based on the number of employees. Costs from Support Department 2 are allocated based on asset value. Relevant department information is provided in the following table. Using the sequential method of support department cost allocation, determine the total costs FROM Support Department 1 (assuming they are allocated first) that should be allocated to Support Department 2 AND to each of the production departments. Support Department 1 Support Department 2 Production Production Department 1 Department 2 Number of employees 9. 7 25 18 Asset value $1,150 $670 $6,230 $5,100 Department cost $20,000 $15,500 $99,000 $79,000
Virgin River Inc. produces horse and rancher equipment. Costs from Support Department 1 are allocated based on the number of employees. Costs from Support Department 2 are allocated based on asset value. Relevant department information is provided in the following table. Using the sequential method of support department cost allocation, determine the total costs FROM Support Department 1 (assuming they are allocated first) that should be allocated to Support Department 2 AND to each of the production departments. Support Department 1 Support Department 2 Production Production Department 1 Department 2 Number of employees 9. 7 25 18 Asset value $1,150 $670 $6,230 $5,100 Department cost $20,000 $15,500 $99,000 $79,000
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 2E
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