Woh Che Co. has four departments: Materials, Personnel, Manufacturing, and Packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow. Indirect Expense Supervision Utilities Insurance Total Cost Allocation Base $ 83,100 Number of employees 56,000 square feet occupied 25,500 Value of assets in use $164,600 Departmental data for the company's recent reporting period follow. Square Feet 32,000 16,000 88,000 24,000 160,000 Department Materials Personnel Manufacturing Packaging Total Employees 34 17 68 51 170 Asset Values $13,200 1,980 34,980 15,840 $66,000 1. Use this information to allocate each of the three indirect expenses across the four departments. 2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments. your answers in the tabs below.

Woh Che Co. has four departments: Materials, Personnel, Manufacturing, and Packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow. Indirect Expense Supervision Utilities Insurance Total Cost Allocation Base $ 83,100 Number of employees 56,000 square feet occupied 25,500 Value of assets in use $164,600 Departmental data for the company's recent reporting period follow. Square Feet 32,000 16,000 88,000 24,000 160,000 Department Materials Personnel Manufacturing Packaging Total Employees 34 17 68 51 170 Asset Values $13,200 1,980 34,980 15,840 $66,000 1. Use this information to allocate each of the three indirect expenses across the four departments. 2. Prepare a summary table that reports the indirect expenses assigned to each of the four departments. your answers in the tabs below.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 7E: Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments,...

See similar textbooks

Similar questions

Service department charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of 64,560, and the Purchasing Department had expenses of 40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: A. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. B. Using the cost driver information in (A), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. C. Why does the Residential Division have a larger support department allocation than the other two divisions, even though its sales are lower?
Profit center responsibility reporting On-Demand Sports Co. operates two divisions—the Action Sports Division and the Team Sports Division. The following income and expense accounts were provided as of November 30. 20Y1, the end of the current fiscal year, after all adjustments, including those for inventories, were recorded The bases to be used in allocating expenses, together with other essential information, are as follows a.Advertising expense—incurred al headquarters, charged back to divisions on the basis of usage: Action Sports Division. $1,200,000; Team Sports Division, $1,800,000. b. Transportation expense—charged hack lo divisions at a charge rale of $18.50 per bill of lading: Action Sports Division, 14.000 bills of lading; Team Sports Division. 21.400 bills of lading. C. Accounts receivable collection expense—incurred al headquarters, charged back to divisions at a charge rate of $9-00 per invoice: Action Sports Division. 32.000 sales invoices; Team Sports Division, 12.500 sales invoices. d. Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Action Sports Division. 120.000 square feet; Team Sports Division. 80.000 square feet. Prepare divisional income statements with two column headings: Action Sports Division and Team Sports Division. Provide supporting schedules for determining service department charges.
Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Refer to Exercise 2.21. Last calendar year, Ellerson recognized revenue of 1,312,000 and had selling and administrative expenses of 204,600. Required: 1. What is the cost of goods sold for last year? 2. Prepare an income statement for Ellerson for last year.
A manufacturing company has two service and two production departments. Human Resources and Machine Repair are the service departments. The production departments are Grinding and Polishing. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The human resources department services all departments of the company, and its costs are allocated using the numbers of employees within each department, while machine repair costs are allocable to Grinding and Polishing on the basis of machine hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
Woh Che Co. has four departments: materials, personnel, manufacturing, and packaging. In a recent month, the four departments incurred three shared indirect expenses. The amounts of these indirect expenses and the bases used to allocate them follow. Indirect Expense Cost Allocation Base Supervision $ 82,500 Number of employees Utilities 50,000 Square feet occupied Insurance 22,500 Value of assets in use Total $ 155,000 Departmental data for the company’s recent reporting period follow. Department Employees Square Feet Asset Values Materials 27 25,000 $ 6,000 Personnel 9 5,000 1,200 Manufacturing 63 55,000 37,800 Packaging 51 15,000 15,000 Total 150 100,000 $ 60,000 1. Use this information to allocate each of the three indirect expenses across the four departments.2. Prepare a summary table that reports the indirect expenses assigned to each of the…
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:
Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $ 560,700 Purchasing Department 89,600 Other corporate administrative expenses 585,000 Total corporate expense $1,235,300 The other corporate administrative expenses include officers’ salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department charges divisions for services, based on the number of purchase orders for each department. The usage of service by the two divisions is as follows: Tech Support Purchasing Consumer Division 320 computers 1,940 purchase orders Commercial Division 310 3,660 Total 630 computers 5,600 purchase orders The service department charges of…
Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate costs for the year ended December 31, 20Y7, are as follows: Tech Support Department $336,000 Purchasing Department 67,500 Other corporate administrative costs 448,000 Total corporate costs $851,500 The other corporate administrative costs include officers’ salaries and miscellaneous smaller costs required by the corporation. The Tech Support Department allocates the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department allocates divisions for services, based on the number of purchase orders for each department. The usage of service by the two divisions is as follows: Tech Support Purchasing Consumer Division 300 computers 1,800 purchase orders Commercial Division 180 2,700 Total 480 computers 4,500 purchase orders The service department allocations…
eBook Service Department Charges In divisional income statements prepared for Iguana Construction Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll checks, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $46,248, and the Purchasing Department had expenses of $26,840 for the year. The following annual data for the Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial GovernmentContract Sales $561,000 $743,000 $1,707,000 Number of employees: Weekly payroll (52 weeks per year) 130 70 75 Monthly payroll 28 39 26 Number of purchase requisitions per year 2,600 1,800 1,700 a. Determine the total amount of payroll checks and purchase requisitions processed per year by each division and the company in total.…
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.
A company has two departments, Y and Z that incur delivery expenses. An analysis of the total delivery expense of $17,000 indicates that Dept. Y had a direct expense of $1,800 for deliveries and Dept. Z had no direct expense. The indirect expenses are $15,200. The analysis also indicates that 45% of regular delivery requests originate in Dept. Y and 55% originate in Dept. Z. Departmental delivery expenses for Dept. Y and Dept. Z, respectively, are:
The centralized computer technology department of Lee Company has expenses of$264,000. The department has provided a total of 2,500 hours of service for the period. TheRetail Division has used 1,125 hours of computer technology service during the period, andthe Commercial Division has used 1,375 hours of computer technology service. How mucheach division should be charged for computer technology department services?