The Bramble Company makes wheels and wings for ground transport vehicles and drones. In addition to the key manufacturing departments, Bramble needs two key support services, provided by its Maintenance and IT departments. The Maintenance costs are allocated to other departments based on the square footage of space each department occupies. The IT department allocates its costs to other departments based on the amount of time the IT employees spend assisting the other departments. The cost information of all four departments, along with their usage information for both allocation bases, is as follows. Initial cost Square feet occupied IT labor hours used Support Departments Operating Departments Wings $120,000 $74,000 $396,000 $700,000 5,040 Maintenance 1,100 IT 1,800 1,100 Wheels 2,160 2,280 1,720 Totals $1,290,000 10,100 5,100
The Bramble Company makes wheels and wings for ground transport vehicles and drones. In addition to the key manufacturing departments, Bramble needs two key support services, provided by its Maintenance and IT departments. The Maintenance costs are allocated to other departments based on the square footage of space each department occupies. The IT department allocates its costs to other departments based on the amount of time the IT employees spend assisting the other departments. The cost information of all four departments, along with their usage information for both allocation bases, is as follows. Initial cost Square feet occupied IT labor hours used Support Departments Operating Departments Wings $120,000 $74,000 $396,000 $700,000 5,040 Maintenance 1,100 IT 1,800 1,100 Wheels 2,160 2,280 1,720 Totals $1,290,000 10,100 5,100
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 6E: Davis Snowflake Co. produces Christmas stockings in its Cutting and Sewing departments. The...
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