FUNDAMENTALS OF COST ACCOUNTING
6th Edition
ISBN: 9781264192236
Author: LANEN, ANDERSO
Publisher: McGraw Hil
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Question
Chapter 11, Problem 60P
a.
To determine
Allocate the service department costs to the two operating departments using the reciprocal method.
b.
To determine
Allocate the service department costs to the two operating departments using the step method.
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Students have asked these similar questions
Problem 11-66 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-4, 5)
Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments
(Processing, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded.
Using Department
Supplying
Department
Processing
Administration
Maintenance
Direct cost
Processing Administration
0
0
10%
$86,000
Variable costs
Fixed costs
Total costs
Avoidable fixed costs
C.
50%
0
20%
a. Processing Department
b. Administration Department
Maintenance Department
$590,000
Maintenance
0
0
0
$256,000
Maximum
Amount
Branches
10%
60%
20%
$4,400,000
The cost accountant at Great Eastern Credit Union estimates that the cost structures in its departments are as follows.
Processing Administration Maintenance Branches
$133,000
$1,800,000
$60,000
26,000
$153,000
437,000
123,000
2,600,000
$86,000
$256,000
$4,400,000
$590,000
$276,000
$ 8,000…
Step-Down Method
The Ferre Publishing Company has three service departments and two operating departments. Selected data from a recent period on the five departments follow
The company allocates service department costs by the step-down method in the following order: Administration (number of employees). Janitorial (space occupied), and Maintenance (hours of press time).
Required:
Using the step-down method, allocate the service department costs to the operating departments.:
Interdepartment Services: Step Method
Jane Cooper's Department Stores allocates the costs of the Personnel and Payroll departments to three retail sales departments, Housewares, Clothing, and Furniture. In addition to providing services to the
operating departments, Personnel and Payroll provide services to each other. Copper's allocates Personnel Department costs on the basis of the number of employees and Payroll Department costs on the basis
of gross payroll. Cost and allocation information for June is as follows:
Direct department cost
Number of employees
Gross payroll
Personnel Payroll Housewares Clothing Furniture
$15,600 $6,400
15
$ 33,500
$ 24,400 $40,000
24
12
12
$ 12,000 $6,600
$ 21,200 $26,100
$ 16,200
(a) Determine the percentage of total Personnel Department services that was provided to the Payroll Department. (Round your answer to one decimal place.)
0
%
%
(b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department.…
Chapter 11 Solutions
FUNDAMENTALS OF COST ACCOUNTING
Ch. 11 - Why do companies allocate costs? What are some of...Ch. 11 - What are the three methods of allocating service...Ch. 11 - What are the similarities and differences among...Ch. 11 - What criterion should be used to determine the...Ch. 11 - What is a limitation of the direct method of...Ch. 11 - What is a limitation of the step method of...Ch. 11 - Prob. 7RQCh. 11 - Why would a number of accountants express a...Ch. 11 - Prob. 9RQCh. 11 - What is the basic difference between the...
Ch. 11 - Prob. 11RQCh. 11 - If cost allocations arc arbitrary and potentially...Ch. 11 - Prob. 13CADQCh. 11 - Prob. 14CADQCh. 11 - Prob. 15CADQCh. 11 - Prob. 16CADQCh. 11 - Prob. 17CADQCh. 11 - Prob. 18CADQCh. 11 - What are some of the factors that a company needs...Ch. 11 - Prob. 20CADQCh. 11 - Prob. 21CADQCh. 11 - Prob. 22CADQCh. 11 - How is joint cost allocation like service...Ch. 11 - Prob. 24CADQCh. 11 - In what ways is joint cost allocation similar to...Ch. 11 - Why Are Costs Allocated?Ethical Issues You are the...Ch. 11 - Cost Allocation: Direct Method Caro Manufacturing...Ch. 11 - Allocating Service Department Costs First to...Ch. 11 - Cost Allwat ion: Direct Method University Printers...Ch. 11 - Prob. 30ECh. 11 - Cost Allocation: Step Method
Refer to the data for...Ch. 11 - Cost Allocation: Reciprocal Method
Refer to the...Ch. 11 - Cost Allocation: Reciprocal Method, Two Service...Ch. 11 - Cost Allocation: Reciprocal Method
Refer to the...Ch. 11 - Prob. 35ECh. 11 - Prob. 36ECh. 11 - Prob. 37ECh. 11 - Prob. 38ECh. 11 - Prob. 39ECh. 11 - Prob. 40ECh. 11 - Net Realizable Value Method: Multiple Choice
Oak...Ch. 11 - Sell or Process Further: Multiple Choice
Refer to...Ch. 11 - Net Realizable Value Method Euclid Corporation...Ch. 11 - Estimated Net Realizable Value Method Blasto,...Ch. 11 - Net Realizable Value Method to Solve for Unknowns...Ch. 11 - Net Realizable Value Method Bixel Components...Ch. 11 - Net Realizable Value Method with By-Products...Ch. 11 - Net Realizable Value Method Deming Sons...Ch. 11 - Physical Quantities Method
Refer to the facts in...Ch. 11 - Sell or Process Further
Refer to the facts in...Ch. 11 - Physical Quantities Method The following questions...Ch. 11 - Physical Quantities Method; Sell or Process...Ch. 11 - Physical Quantities Method with By-Product...Ch. 11 - Step Method with Three Service Departments Model,...Ch. 11 - Comparison of Allocation Methods BluStar Company...Ch. 11 - Solve for Unknowns: Direct Method Franks Foods has...Ch. 11 - Solve for Unknowns: Step Method RT Renovations is...Ch. 11 - Cost Allocation: Step Method with Analysis and...Ch. 11 - Prob. 59PCh. 11 - Prob. 60PCh. 11 - Direct, Step, and Reciprocal Methods:...Ch. 11 - Cost Allocation: Step and Reciprocal Methods...Ch. 11 - Allocate Service Department Costs: Direct and Step...Ch. 11 - Prob. 64PCh. 11 - Prob. 65PCh. 11 - Prob. 66PCh. 11 - Prob. 67PCh. 11 - Prob. 68PCh. 11 - Fletcher Fabrication, Inc., produces three...Ch. 11 - Findina Missing Data: Net Realizable Value Spartan...Ch. 11 - Finding Missing Data: Net Realizable Value Blaine,...Ch. 11 - Joint Costing in a Process Costing Context:...Ch. 11 - Find Maximum Input Price: Estimated Net Realizable...Ch. 11 - Effect of By-Product versus Joint Cost Accounting...Ch. 11 - Prob. 75PCh. 11 - Prob. 76P
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