Support Department Cost Allocation Arctic Tundra Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Used by Department Support Dept. S1 S2 P1 P2 S1 - 10% 40% 50% S2 20% - 50% 30% Direct costs $4,500 $8,000 $10,000 $15,000 Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. Also show the total costs for each producing department. Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The size of the direct costs of the department determines the order of allocation. Also show the total costs for each producing department.
Support Department Cost Allocation Arctic Tundra Company has two support departments (S1 and S2) and two producing departments (P1 and P2). Estimated direct costs and percentages of services used by these departments are as follows: Used by Department Support Dept. S1 S2 P1 P2 S1 - 10% 40% 50% S2 20% - 50% 30% Direct costs $4,500 $8,000 $10,000 $15,000 Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. Also show the total costs for each producing department. Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The size of the direct costs of the department determines the order of allocation. Also show the total costs for each producing department.
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 2BE: Support department allocations The centralized computer technology department of Hardy Company has...
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Support Department Cost Allocation
Arctic Tundra Company has two support departments (S1 and S2) and two producing departments (P1 and P2).
Estimated direct costs and percentages of services used by these departments are as follows:
|
Used by Department |
||||
|
Support Dept. |
S1 |
S2 |
P1 |
P2 |
|
S1 |
- |
10% |
40% |
50% |
|
S2 |
20% |
- |
50% |
30% |
|
Direct costs |
$4,500 |
$8,000 |
$10,000 |
$15,000 |
- Prepare a schedule allocating the support department costs to the producing departments using the direct allocation method. Also show the total costs for each producing department.
- Prepare a schedule allocating the support department costs to the producing departments using the sequential allocation method. The size of the direct costs of the department determines the order of allocation. Also show the total costs for each producing department.
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