Direct and step methodsSalado Inc. provides cleaning services through its Residential and Commercial divisions. Support services of thecompany are provided by Personnel and Administration areas. Costs of these two areas are allocated to the revenueproducing departments. Personnel costs are allocated using number of employees; administration costs areallocated using direct department costs. The following annual budgeted information (presented in a benefits-provided ranking) is available:Personnel Administration Residential CommercialDirect costs$420,000Number of employees36Direct labor hoursSquare feet cleaned$540,000$1,440,000$2,400,00090216180,0001,350,000144270,0001,710,000a. Using the direct method, allocate the costs of Personnel and Administration to the Residential and Commercialdivisions.Note: Do not round proportions; round your final answer to the nearest whole dollar.Total support costs allocated to Residential = $Total support costs allocated to Commercial = $454,500505,500b. Using the step method, allocate the costs of Personnel and Administration to the Residential and Commercialdivisions.Note: Do not round proportions; round your final answer to the nearest whole dollar.Total support costs allocated to Residential = $Total support costs allocated to Commercial = $c. Salado prices jobs by the direct labor hour for Residential services and by the square foot cleaned for Commercialservices. Compute the full cost of providing one direct labor hour of service for Residential and for one square footcleaned for Commercial using (1) the direct method and (2) the step method.Note: Round your answers to two decimal places (i.e. round $4.555 to $4.56).(1) Direct MethodResidential cost per hour of service$10.531.7Commercial cost per square foot cleaned $(2) Step MethodResidential cost per hour of service$Commercial cost per square foot cleaned $

Lets understand the basics.Service department costs are allocated to production department using,(1)…

Direct and step methods Salado Inc. provides cleaning services through its Residential and Commercial divisions. Support services of the company are provided by Personnel and Administration areas. Costs of these two areas are allocated to the reven producing departments. Personnel costs are allocated using number of employees; administration costs are allocated using direct department costs. The following annual budgeted information (presented in a benefits- provided ranking) is available: Direct costs Number of employees Direct labor hours Square feet cleaned Personnel Administration Residential Commercial $420,000 36 $540,000 90 $1,440,000 $2,400,000 216 144 180,000 1,350,000 270,000 1,710,000

Direct and step methods Salado Inc. provides cleaning services through its Residential and Commercial divisions. Support services of the company are provided by Personnel and Administration areas. Costs of these two areas are allocated to the reven producing departments. Personnel costs are allocated using number of employees; administration costs are allocated using direct department costs. The following annual budgeted information (presented in a benefits- provided ranking) is available: Direct costs Number of employees Direct labor hours Square feet cleaned Personnel Administration Residential Commercial $420,000 36 $540,000 90 $1,440,000 $2,400,000 216 144 180,000 1,350,000 270,000 1,710,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950
Salado Inc. provides cleaning services through its Residential and Commercial divisions. Support services of the company are provided by Personnel and Administration areas. Costs of these two areas are allocated to the revenue producing departments. Personnel costs are allocated using number of employees; administration costs are allocated using direct department costs. The following annual budgeted information (presented in a benefits-provided ranking) is available: Personnel Administration Residential Commercial Direct costs $196,000 $252,000 $672,000 $1,120,000 Number of employess 17 42 101 67 Direct labor hours 84,000 126,000 Square feet cleaned 630,000 798,000 a. Using the direct method, allocate the costs of Personnel and Administration to the Residential and Commercial divisions. Total support costs allocated to Residential = $ Total support costs allocated to Commercial = $ b. Using the step method, allocate the costs of Personnel and…
Direct and step methods Salado Inc. provides cleaning services through its Residential and Commercial divisions. Support services of the company are provided by Personnel and Administration areas. Costs of these two areas are allocated to the revenue producing departments. Personnel costs are allocated using number of employees; administration costs are allocated using direct department costs. The following annual budgeted information (presented in a benefits-provided ranking) is available: Direct costs Number of employees Direct labor hours Square feet cleaned Personnel Administration Residential Commercial $280,000 24 $360,000 $960,000 $1,600,000 60 144 96 120,000 900,000 180,000 1,140,000 a. Using the direct method, allocate the costs of Personnel and Administration to the Residential and Commercial divisions. Note: Do not round proportions; round your final answer to the nearest whole dollar. Total support costs allocated to Residential = $ Total support costs allocated to…
Nanda Company has two service departments, Maintenance and Personnel. Maintenance Department costs of P160,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of P40,000 are allocated based on the number of employees. The costs of operating departments A and B are P80,000 and P120,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Production Departments Maintenance A B Department Budgeted costs P160,000 P40,000 P80,000 P120,000 Budgeted ΝΑ 400 480 320 maintenance-hours Number of employees 20 ΝΑ 80 240 Using the step-down method, what amount of Maintenance Department cost will be allocated to Department A if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up) Personnel Department
Middler Corporation, a manufacturer of electronics and communications systems, uses a service department charge system to charge profit centers with Computing and Communications Services (CCS) service department costs. The following table identifies an abbreviated list of service categories and activity bases used by the CCS department. The table also includes some assumed cost and activity base quantity information for each service for October. CCS ServiceCategory Activity Base Budgeted Cost Budgeted ActivityBase Quantity Help desk Number of calls $160,000 3,200 Network center Number of devices monitored 735,000 9,800 Electronic mail Number of user accounts 100,000 10,000 Handheld Technology support Number of handheld devices issued 124,600 8,900 One of the profit centers for Middler Corporation is the Communication Systems (COMM) sector. Assume the following information for the COMM sector: The sector has 5,200 employees, of whom 25% are office…
Middler Corporation, a manufacturer of electronics and communications systems, uses a service department charge system to charge profit centers with Computing and Communications Services (CCS) service department costs. The following table identifies an abbreviated list of service categories and activity bases used by the CCS department. The table also includes some assumed cost and activity base quantity information for each service for October. CCS ServiceCategory Activity Base Budgeted Cost Budgeted ActivityBase Quantity Help desk Number of calls $55,660 2,200 Network center Number of devices monitored 668,100 10,200 Electronic mail Number of user accounts 57,500 5,750 Handheld technology support Number of handheld devices issued 153,600 9,600 One of the profit centers for Middler Corporation is the Communication Systems (COMM) sector. Assume the following information for the COMM sector: The sector has 1,000 employees, of whom 50% are office employees.…
Middler Corporation, a manufacturer of electronics and communications systems, uses a service department charge system to charge profit centers with Computing and Communications Services (CCS) service department costs. The following table identifies an abbreviated list of service categories and activity bases used by the CCS department. The table also includes some assumed cost and activity base quantity information for each service for October. CCS ServiceCategory Activity Base Budgeted Cost Budgeted ActivityBase Quantity Help desk Number of calls $82,350 2,700 Network center Number of devices monitored 631,125 9,350 Electronic mail Number of user accounts 63,500 6,350 Handheld technology support Number of handheld devices issued 140,800 8,800 One of the profit centers for Middler Corporation is the Communication Systems (COMM) sector. Assume the following information for the COMM sector: The sector has 1,000 employees, of whom 30% are office employees.…
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $370,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $170,000 are allocated based on the number of employees. The costs of operating departments A and B are $216,000 and $324,000, respectively. Data on budgeted maintenance - hours and number of employees are as follows: Budgeted costs Budgeted maintenance - hours Number of employees Support Departments Maintenance Personnel Department Production Departments Department $370,000 ΝΑ A $170,000 $216,000 $324,000 800 1,270 630 B 65 ΝΑ 280 700 Using the direct method, what amount of Maintenance Department costs will be allocated to Department B? (Do not round any intermediary calculations.)
Varney Corporation, a manufacturer of electronics and communications systems, allocates Computing and Communications Services Department (CCS) costs to profit centers. The following table lists the types of services and cost drivers for each service. The table also includes the budgeted cost and quantity for each service for August. CCS ServiceCategory Cost Drivers Budgeted Cost Budgeted Quantityof Services Help desk Number of calls $50,400 2,800 Network center Number of devices monitored 170,100 2,100 Electronic mail Number of user accounts 151,700 4,100 Smartphone support Number of smartphones issued 115,600 3,400 One of the profit centers for Varney Corporation is the Communication Systems (COMM) sector. Assume the following information for COMM: • COMM has 2,400 employees, of whom 40% are office employees. • All the office employees have been issued a smartphone, and 92% of them have a computer on the network. • Ninety percent of the employees with a…
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $350,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $180,000 and $270,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Support Departments Maintenance Personnel Department Department $350,000 $100.000 A B $180,000 $270,000 Budgeted costs Budgeted ΝΑ 880 1,230 670 maintenance - hours Number of employees 100 280 600 Using the direct method, what amount of Personnel Department costs will be allocated to Department A? (Do not round any intermediary calculations.) OA. $31,818 OB. $68,182 OC. $28,571 O D. $57,273 Production Departments NA
Varney Corporation, a manufacturer of electronics and communications systems, allocates Computing and Communications Services Department (CCS) costs to profit centers. The following table lists the types of services and cost drivers for each service. The table also includes the budgeted cost and quantity for each service for August. CCS ServiceCategory Cost Drivers Budgeted Cost Budgeted Quantityof Services Help desk Number of calls $70,300 3,700 Network center Number of devices monitored 140,400 1,800 Electronic mail Number of user accounts 148,500 4,500 Smartphone support Number of smartphones issued 87,000 3,000 One of the profit centers for Varney Corporation is the Communication Systems (COMM) sector. Assume the following information for COMM: • COMM has 2,300 employees, of whom 25% are office employees. • All the office employees have been issued a smartphone, and 93% of them have a computer on the network. • Ninety percent of the employees with a…
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $370,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $120,000 are allocated based on the number of employees. The costs of operating departments A and B are $196,000 and $294,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows: Production Departments Budgeted costs $370,000 Budgeted maintenance- hours Number of employees Maintenance Personnel Department Department 200 Support Departments 90 870 A $120,000 $196,000 $294,000 15 B 1,260 670 280 680 Using the direct method, what amount of Personnel Department costs will be allocated to Department B? (Do not round any intermediary calculations.)