BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

Solutions

Chapter
Section
BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
11 views

Use the following information for Brief Exercises 4-34 and 4-35:

Sanjay Company manufactures a product in a factory that has two producing departments, Assembly and Painting, and two support departments, S1 and S2. The activity driver for S1 is square footage, and the activity driver for S2 is number of machine hours. The following data pertain to Sanjay:

Chapter 4, Problem 35BEB, Use the following information for Brief Exercises 4-34 and 4-35: Sanjay Company manufactures a

Brief Exercises 4-35 (Appendix 4B) Sequential Method

Refer to the information for Sanjay Company on the previous page. Now assume that Sanjay uses the sequential method to allocate support department costs. S1 is allocated first, then S2.

Required:

  1. 1. Calculate the cost assignment ratios to be used under the sequential method for S2, Assembly, and Painting. Carry out your answers to four decimal places.
  2. 2. Allocate the overhead costs to the producing departments by using the sequential method.

1.

To determine

Computecost assignment ratios for S2 under sequential method.

Explanation

Sequential Method:

Sequential method recognizes that there is possible interaction between the support departments. However, it does notaccount for such interaction in full which makes it more accurate as compared to the direct method.

Use the following formula to calculatecost assignment ratios for S1 on the basis of number of square footage:

S2:

S2=Number of square footage​ in S2Total square footage 

Substitute 500 for number of square footage in S2 and 3,000 for total square footage in the above formula.

S2=500 square footage3,000 square footage=0.1667

Therefore, the cost assignment ratio for S2 is 0.1667.

Assembly department:

Assembly=Number of square footage​ in cuttingTotal square footage 

Substitute 1,875 for number ofsquare footage in assembly and 3,000 for total square footage in the above formula.

Assembly=1,875 square footage3,000 square footage=0.6250

Therefore, the cost assignment ratio for assembly department is 0.6250.

Painting department:

Painting=Number of square footage​ in sewingTotal square footage​

Substitute 625 for number ofsquare footage in assembly and 3,000 for total square footage in the above formula.

Painting=625 square footage3,000​ square footage=0.2083

Therefore, the cost assignment ratio for painting department is 0.2083.

Use the following formula to calculate cost assignment ratios for Department S2 on the basis of number of machine hours:

Assembly department:

Assembly=Number of machine hours of assemblyTotal machine hours of producing departments

Substitute 3,200 for number of machine hoursofassembly and 16,000 for total machine hours of producing department in the above formula.

Assembly= 3,200 hours16,000 hours=0

2.

To determine

Allocate the support department costs to the producing departments by using the sequential method:

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Explain how absolute advantage and comparative advantage differ.

Essentials of Economics (MindTap Course List)

As a first step, we need to estimate what percentage of MMMs capital comes from debt, preferred stock, and comm...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)