MalntenanceSecurityMiningCuttingDepartmentDepartmentDepartmentDepartmentMaintenance cost allocationSecurity cost allocationProduction activities total costs$43. Assume Jake's Gems is considering cutting costs by switching to a simpler support activity cost allocation method. Determine the total costs allocated fromeach support activity to the other activities.MIningCuttingParticularsDepartmentDepartmentMaintenance cost2$Security cost2$$4Production activities total cost%24$4Is it viable for the company to choose the direct method of cost allocation?Which of the following supports your answer?a. The direct cost allocation method is too simple and it is not accurate.b. The difference between the direct cost allocation method and the reciprocal method is minimal and the direct method is easier.c. The reciprocal method of cost allocation is more accurate and easier than the direct method.d. None of the above. Support activity cost allocationJake's Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These productionactivities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenancecosts are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Informationregarding the activities is provided in the following table:MalntenanceSecurityMiningCuttingNumber of service calls17206020Machine hours8988182176Asset value$200,000$80,000$300,000$300,000Department cost$25,000$42,500$160,0001. Is the process of allocating maintenance costs based on machine hours correct? Identify the measure than can possibly be used to allocate the$95,000maintenance costs.Measures that can possibly be used to allocate the maintenance costs.a. Number of service callsb. Asset valuec. Department costd. None of the above2. Based on your response to part (1), determine the total costs allocated from each support activity to the other activities using the reciprocal servicesmethod and the most appropriate cost driver for Maintenance.

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Department Department Department Department Maintenance cost allocation $4 Security cost allocation Production activities total costs 3. Assume Jake's Gems is considering cutting costs by switching to a simpler support activity cost allocation m each support activity to the other activities. Mining Cutting Department Department Particulars Maintenance cost $4 Security cost Production activities total cost s it viable for the company to choose the direct method of cost allocation?

Department Department Department Department Maintenance cost allocation $4 Security cost allocation Production activities total costs 3. Assume Jake's Gems is considering cutting costs by switching to a simpler support activity cost allocation m each support activity to the other activities. Mining Cutting Department Department Particulars Maintenance cost $4 Security cost Production activities total cost s it viable for the company to choose the direct method of cost allocation?

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 2PA: Support activity cost allocation Jakes Gems mines and produces diamonds, rubies, and other gems. The...

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Support activity cost allocation Jake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenance costs are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Information regarding the activities is provided in the following table: Maintenance Security Mining Cutting Number of service calls 17 20 60 20 Machine hours 89 88 182 176 Asset value $200,000 $80,000 $300,000 $300,000 Department cost $25,000 $42,500 $160,000 $95,000 1. Is the process of allocating maintenance costs based on machine hours correct? Identify the measure than can possibly…
Support activity cost allocation Jake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenance costs are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Information regarding the activities is provided in the following table: Maintenance Security Mining Cutting Number of service calls 17 20 60 20 Machine hours 89 88 182 176 Asset value $200,000 $80,000 $300,000 $300,000 Department cost $25,000 $42,500 $160,000 $95,000 1. Is the process of allocating maintenance costs based on machine hours correct? Identify the measure than can possibly…
Support activity cost allocation Jake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenance costs are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Information regarding the activities is provided in the following table: Maintenance Security Mining Cutting Number of service calls 17 20 60 20 Machine hours 89 88 182 176 Asset value $200,000 $80,000 $300,000 $300,000 Department cost $25,000 $42,500 $160,000 $95,000 Is the process of allocating maintenance costs based on machine hours correct? Identify the measure than can possibly be used to allocate the maintenance costs. Measures that can…
Support activity cost allocation Jake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenance costs are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Information regarding the activities is provided in the following table: Maintenance Security Mining Cutting Number of service calls 17 20 60 20 Machine hours 89 88 182 176 Asset value $200,000 $80,000 $300,000 $300,000 Department cost $25,000 $42,500 $160,000 $95,000 1. Is the process of allocating maintenance costs based on machine hours correct? Identify the measure than can possibly…
Support activity cost allocation Jake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenance costs are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Information regarding the activities is provided in the following table: Maintenance Security Mining Cutting Number of service calls 17 20 60 20 Machine hours 89 88 182 176 Asset value $200,000 $80,000 $300,000 $300,000 Department cost $25,000 $42,500 $160,000 $95,000 2. Based on your response to part (1), determine the total costs allocated from each support activity to the other…
Support activity cost allocationJake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenance costs are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Information regarding the activities is provided in the following table:MaintenanceSecurityMiningCuttingNumber of service calls17 20 60 20 Machine hours89 88 182 176 Asset value$200,000 $80,000 $300,000 $300,000 Department cost$25,000 $42,500 $160,000 $95,000 1. Is the process of allocating maintenance costs based on machine hours correct? Identify the measure than can possibly be used to allocate the maintenance costs.No Measures that can possibly be used to allocate the maintenance costs.a. Number of service…
Jake’s Gems mines and produces diamonds, rubies, and other gems. The gems are produced by way of the Mining and Cutting activities. These production activities are supported by the Maintenance and Security activities. Security costs are allocated to the production activities based on asset value. Maintenance costs are normally allocated based on machine hours. However, Maintenance costs typically correlate more with the number of service calls. Information regarding the activities is provided in the following table: Maintenance Security Mining Cutting Number of service calls 17       20    60    20 Machine hours 89       88    182    176 Asset value $200,000       $80,000    $300,000    $300,000 Department cost $25,000       $42,500    $160,000    $95,000 1. Is the process of allocating maintenance costs based on machine hours correct? Identify the measure than can possibly be used to allocate the…
I need help with the following: Support department cost allocation—reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: MaintenanceDepartment SecurityDepartment CuttingDepartment SewingDepartment Machine hours 800    2,000 6,400    11,600 Asset value $2,000    $1,420 $1,500 $6,500 Department cost $36,720    $16,320 $64,000 $84,000 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. CuttingDepartment SewingDepartment…
Support Department Cost Allocation—Reciprocal Services Method Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Security departments support the production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security Department are allocated based on asset value. Relevant department information is provided in the following table: JanitorialDepartment SecurityDepartment MoldingDepartment AssemblyDepartment Square feet 630    1,800    1,800    5,400    Asset value $120    $140    $1,380    $1,500    Department cost $2,000    $1,200    $10,400    $12,700    Using the reciprocal services method of support department cost allocation, determine: a. The percentage of Janitorial costs that should be allocated to the Security Department.fill in the blank 1% b. The percentage of Security costs that should be allocated to the…
Support Department Cost Allocation—Reciprocal Services Method Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Security departments support the production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security Department are allocated based on asset value. Relevant department information is provided in the following table: Janitorial Department SecurityDepartment MoldingDepartment AssemblyDepartment Square feet 600 900 900 7,200 Asset value $400 $420 $2,100 $2,500 Department cost $1,700 $1,400 $10,400 $12,500 Using the reciprocal services method of support department cost allocation, determine: a. The percentage of Janitorial costs that should be allocated to the Security Department. % b. The percentage of Security costs that should be allocated to the Janitorial Department.…
Support department cost allocation Blue Mountain Masterpieces produces pictures, paintings, and other home decor. The Printing and Framing production departments are supported by the Janitorial and Security departments. Janitorial costs are allocated to the production departments based on square feet, and security costs are allocated based on asset value. Information about these departments is detailed in the following table: Management has experimented with different support department cost allocation methods in the past. The different allocation methods did not yield large differences of cost allocation to the production departments. Instructions 1. Determine which support department cost allocation method Blue Mountain Masterpieces would most likely use to allocate its support department costs to the production departments. 2. Determine the total costs allocated from each support department to each production department using the method you determined in part (1). 3. Without doing calculations, consider and answer the following: If Blue Mountain Masterpieces decided to use square feet instead of asset value as the cost driver for security services, how would this change the allocation of Security Department costs?
Classify each of the following as either one-time or recurring costs: a. training personnel b. initial programming and testing c. systems design d. hardware costs e. software maintenance costsf. site preparation g. rent for facilities h. data conversion from old system to new system i. insurance costs j. installation of original equipment k. hardware upgrades