Chapter 4B Demonstration Problems Page 1 Please Send Comments and Corrections to me at [email protected] Demo 4B-1 The following information is given: Support Departments Producing Departments 1 2 1 2 Application Basis Sq. Ft. Used DLHs Used Expected use of Support Dept. 1 100 Sq. Ft. 2,000 Sq. Ft. 1,200 Sq. Ft. Expected use of Support Dept. 2 10 Hours 120 Hours 130 Hours Expected Support Costs $15,000 $40,000 Support Department 2 provides more support to Support Department 1 than Support Department 1 does to Support Department 2. Determine the amount of support cost aIIocated to each of the Producing Departments from the Support Departments using (a) the Direct Method, (b) the Step-Down Method, and (c) the Reciprocal Method. Demo 4B-2 The following are selected operating data for the Producing and Support Departments of Bluestone Company for 20x3. Support Departments Producing Departments 1 2 1 2 Indirect Material $48,400 $ 82,200 $254,400 $ 516,000 Indirect Labor $97,200 $144,000 $325,840 $1,439,000 Cubic Yds. of Factory Space 10,000 20,000 88,000 132,000 Machine Hours 20,000 20,000 51,200 204,800 Costs for Support Departments 1 and 2 are allocated to Producing Departments on the basis of cubic yards of factory space and machine hours, respectively. Determine the amount of support cost that is allocated to each of the Producing Departments from the Support Departments using (a) the Direct Method, (b) the Step-Down Method, and (c) the Reciprocal Method.Chapter 4B Demonstration Problems Page 2 Please Send Comments and Corrections to me at [email protected] Demo 4B-3 Yolanda Company's annual budget for its Support Departments (Maintenance and Legal) and its two Producing Departments (Assembly and Finishing) is as follows: Maintenance Legal Assembly Finishing Cost $1,185 $840 $3,760 $3,600 Sq. Ft. 300 300 800 1,000 M & E hours 15 20 80 75 The basis for allocating each Support Department costs are: (i) Maintenance, M&E hours, and (ii) Legal, floor space. Determine the amount of support cost aIIocated to each of the Producing Departments from the Support Departments using (a) the Direct Method, (b) the Step-Down Method, and (c) the Reciprocal
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