MANAGERIAL ACCOUNTING
16th Edition
ISBN: 9781260936322
Author: Garrison
Publisher: MCG
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Chapter 4.B, Problem 6P
PROBLEM 4B-6 Step-Down Method versus Direct Method; Predetermined
| Factory Administration | $270,000 |
| Custodial Services | 68,760 |
| Personnel | 28,840 |
| Maintenance | 45,200 |
| Machining-overhead | 376,300 |
| Assembly-overhead | 175.900 |
| Total cost | $955,000 |
The company allocates service department costs to other departments in the order listed below.
Square
| Department | Number of Employees | Total Labor- Hours |
Feet of Space Occupied | Direct Labor- Hours |
Machine- Hours |
| Factory Administration ... | ... 12 | - | 5,000 | - | - |
| Custodial Services | ... 4 |
3,000 | 2,000 | - | - |
| Personnel | ... 5 |
5,000 | 3,000 | - | - |
| Maintenance | ... 25 |
22,000 | 10,000 | - | - |
| Machining | ... 40 |
30,000 | 70,000 | 20,000 | 70,000 |
| Assembly | ... 60 | 90,000 | 20,000 | 80,000 | 10,000 |
| 146 | 150.000 | 110,000 | 100,000 | 80,000 |
Machining and Assembly are operating departments: the other departments are service departments. Factory Administration is allocated based on labor-hours: Custodial Services based on square feet occupied: Personnel based on number of employees: and Maintenance based on machine-hours.
Required:
- Allocated services department costs to consuming departments by the step-down method. Then compute predetermined overhead rates in the operating departments using machine-hours as the allocated base in Machining and direct labor-hours as the allocation base in Assembly.
- Repeat (1) above, this time using the direct method. Again compute predetermined overhead rates in Machining and Assembly.
- Assume that the company doesn’t bother with allocating service department costs but simply computers a single plantwide overhead rate that divides the total overhead costs (both service department and operating costs) by the total direct labor-hours. Compute the plantwide overhead rate.
- Suppose a job requires machine and labor time as follows:
| Machine-Hours | Direct Labour-Hours | |
| Machine Department | 190 | 25 |
| Assembly Department | 10 | 75 |
| Total hours | 200 | 100 |
Using the overhead rates computed in (l). (I), and (3) above, compute the amount of overhead cost that would be assigned to the job if the overhead rates were developed using the step-down method, the direct method, and the plantwide method.
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Chapter 4 Solutions
MANAGERIAL ACCOUNTING
Ch. 4.A - EXERCISE 4A-1 Computation of Equivalent Units of...Ch. 4.A - EXERCISE 4A-2 Cost per Equivalent Unit-FIFO Method...Ch. 4.A - EXERCISE 4A-3 Assigning Costs to Units-FIFO Method...Ch. 4.A - EXERCISE 4A-4 Cost Reconciliation Report-EIFO...Ch. 4.A - EXERCISE 4A-5 Computation of Equivalent Units of...Ch. 4.A - EXERCISE 4A-6 Equivalent Units of Production-FIFO...Ch. 4.A - EXERCISE 4A-7 Equivalent Units of Production and...Ch. 4.A -
EXERCISE 4A-8 Equivalent Units of Production—FIFO...Ch. 4.A - EXERCISE 4A-9 Equivalent Units; Equivalent Units...Ch. 4.A - PROBLEM 4A-10 Equivalent Units of Production;...
Ch. 4.A - Prob. 11PCh. 4.A - Prob. 12CCh. 4.B - Prob. 1ECh. 4.B - EXERCISE 4B-2 Step-Down Method LO4-11 Madison Park...Ch. 4.B - Prob. 3ECh. 4.B - EXERCISE 4B-4 Direct Method LO4-10 Refer to the...Ch. 4.B - PROBLEM 4B-5 Step-Down Method L04-11 Woodbury...Ch. 4.B - PROBLEM 4B-6 Step-Down Method versus Direct...Ch. 4.B - CASE 4B-7 Step-Down Method versus Direct Method...Ch. 4 - Prob. 1QCh. 4 - In what ways are job-order and process costing...Ch. 4 - Why is cost accumulation simpler in a process...Ch. 4 - How many Work in Process accounts are maintained...Ch. 4 - Prob. 5QCh. 4 - Prob. 6QCh. 4 - Prob. 7QCh. 4 - Prob. 8QCh. 4 - Prob. 1AECh. 4 - This exercise relates to the Double Diamond Skis’...Ch. 4 - This exercise relates to the Double Diamond Skis’...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 -
Clopack Company manufactures one product that...Ch. 4 -
Clopack Company manufactures one product that...Ch. 4 -
Clopack Company manufactures one product that...Ch. 4 - Clopack Company manufactures one product that goes...Ch. 4 - Prob. 10F15Ch. 4 - Prob. 11F15Ch. 4 - Prob. 12F15Ch. 4 -
Clopack Company manufactures one product that...Ch. 4 - Prob. 14F15Ch. 4 - Prob. 15F15Ch. 4 - Prob. 1ECh. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - EXERCISE 4-4 Assigning Costs to...Ch. 4 - EXERCISE 4-5 Cost Reconciliation...Ch. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Prob. 8ECh. 4 -
EXERCISE 4-9 Equivalent Units and Cost per...Ch. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 13PCh. 4 - Prob. 14PCh. 4 - Prob. 15PCh. 4 - PROBLEM 4-16 Comprehensive...Ch. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19CCh. 4 - (
CASE 4-20 Ethics and the Manager, Understanding...
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