Pre Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1)Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, InformationTechnology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded:SupplyingDepartmentTransactionsITOperations.Direct costFrom:TransactionsITOperationsTransactionsTotal010%60%$ 400,000ITCosts OperationsUsing DepartmentOperations0$ 820,000030%0Allocated to:TransactionsRetailRequired:a. Allocate the service department costs to the two operating departments using the reciprocal method.70%30810%$ 1,660,000 $ 3,860,000Retail CommercialCommercial30%30%30%$ 2,410,000

for allocating service department costs to operational department we can use various methods.1. Step…

Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations. Direct cost Transactions 0 10% 60% $ 400,000 IT Using Department Operations 0 0 $ 820,000 0 30% 0 Retail 70% 308 10% $ 1,660,000 $ 3,860,000 Commercial 30% 308 30% $ 2,410,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method.

Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations. Direct cost Transactions 0 10% 60% $ 400,000 IT Using Department Operations 0 0 $ 820,000 0 30% 0 Retail 70% 308 10% $ 1,660,000 $ 3,860,000 Commercial 30% 308 30% $ 2,410,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method.

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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Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost Using Department Transactions IT Operations Retail Commercial Ө Ө 70% 30% 10% Ө 20% 30% 40% 50% Ө Ө 10% 40% $ 390,000 $ 810,000 $ 1,650,000 $ 3,850,000 $ 2,400,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. From: Costs Operations Allocated to: Transactions Retail Commercial IT $ 810,000 $ 162,000 $ 81,000 $ 243,000 $ 324,000 Operations Transactions Total $ 243,000 $ 324,000
Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Transactions Total 8 18% 70% $ 310,000 IT Costs Operations S 250,000 $ 750,000 670,000 x 1,510,000 x Using Department Operations 8 8 8 $ $ 730,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. x Answer is complete but not entirely correct. Allocated to: Transactions 250,000 XS 2,233,333 x $ 8 30% 8 $ 1,570,000 $ 3,770,000 Retail 0X X $ Retail OX 0x 0 Commercial S 70% 30% 18% 833,333 X 0x 0 x 833,333 Commercial 30% 38% 28 $ 2,320,000
Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-1) Dunedin Bank has two operating departments (Retail and Commercial) and three service departments: Operations, Information Technology (IT), and Transactions. For the last period, the following costs and service department usage ratios were recorded: Supplying Department Transactions IT Operations Direct cost IT From: Operations Transactions Transactions Total 8 10% 70% $ 310,000 IT Using Department Operations Costs Operations S 250,000 $ 750,000 670,000 X 1,510,000 x 8 8 8 $ 730,000 Required: a. Allocate the service department costs to the two operating departments using the reciprocal method. Answer is complete but not entirely correct. Allocated to: Transactions $ 250,000 $ 2,233,333 x 8 30% 8 $ 1,570,000 $ Retail Retail 0X $ 0.x 0x 0 Commercial S $ 3,770,000 78% 30% 10% 833,333 X 0x 0x 833,333 Commercial 36% 38% 28% $ 2, 320, 000
Problem 11-60 (Algo) Cost Allocation: Step and Reciprocal Methods (LO 11-3, 4) Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded: Supplying Department Using Department Processing Administration Maintenance Branches Electronic Processing 0 40 % 0 15 % 45 % Administration 0 0 0 60 % 40 % Maintenance 10 % 20 % 0 20 % 50 % Direct cost $ 89,000 $ 590,000 $ 310,000 $ 4,900,000 $ 1,950,000 Required: Allocate the service department costs to the two operating departments using the reciprocal method.
Problem 11-66 (Algo) Reciprocal Cost Allocation-Outsourcing a Service Department (LO 11-4, 5) Great Eastern Credit Union (GECU) has two operating departments (Branches and Electronic) and three service departments (Processing, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded. Using Department Supplying Department Processing Administration Maintenance Direct cost Processing Administration 0 0 10% $86,000 Variable costs Fixed costs Total costs Avoidable fixed costs C. 50% 0 20% a. Processing Department b. Administration Department Maintenance Department $590,000 Maintenance 0 0 0 $256,000 Maximum Amount Branches 10% 60% 20% $4,400,000 The cost accountant at Great Eastern Credit Union estimates that the cost structures in its departments are as follows. Processing Administration Maintenance Branches $133,000 $1,800,000 $60,000 26,000 $153,000 437,000 123,000 2,600,000 $86,000 $256,000 $4,400,000 $590,000 $276,000 $ 8,000…
Calculating ABC Unit Costs Perkins National Bank has collected the following information for four activities and two types of credit cards: Activity Driver Classic Gold Activity Rate ($) Processing transactions Transactions processed 12,000 7,200 0.20 Preparing statements Number of statements 12,000 7,200 0.95 Answering questions Number of calls 24,000 36,000 4.00 Providing ATMs ATM transactions 48,000 14,400 1.50 There are 5,000 holders of Classic cards and 21,000 holders of the Gold cards. Required: Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards. Unit cost for Classic $fill in the blank 1 Unit cost for Gold $fill in the blank 2
Calculating ABC Unit Costs Perkins National Bank has collected the following information for four activities and two types of credit cards: Activity Driver Classic Gold Activity Rate ($) Processing transactions Transactions processed 12,000 7,200 0.20 Preparing statements Number of statements 12,000 7,200 0.95 Answering questions Number of calls 24,000 36,000 4.00 Providing ATMs ATM transactions 48,000 14,400 1.50 There are 4,700 holders of Classic cards and 19,900 holders of the Gold cards. Required: Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards. Unit cost for Classic Unit cost for Gold
> Calculating ABC Unit Costs Perkins National Bank has collected the following information for four activities and two types of credit cards: Activity Driver Classic Gold Activity Rate Processing transactions Transactions processed 12,000 7,200 $0.20 Preparing statements Number of statements 12,000 7,200 0.95 Answering questions Number of calls 24,000 36,000 4.00 ATM transactions 48,000 14,400 1.50 Providing ATMS There are 7,500 holders of Classic cards and 30,000 holders of Gold cards. Required: Calculate the unit cost (rounded to the nearest cent) for Classic and Gold credit cards. Unit cost for Classic Unit cost for Gold 35.66 X 9.07 X
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
Customers as a Cost ObjectMorrisom National Bank has requested an analysis of checking account profitability by customer type. Customers are categorized according to the size of their account: low balances, mediumbalances, and high balances. The activities associated with the three different customer categories and their associated annual costs are as follows: Required:(Note: Round answers to two decimal places.)1. Calculate a cost per account per year by dividing the total cost of processing andmaintaining checking accounts by the total number of accounts. What is the average feeper month that the bank should charge to cover the costs incurred because of checkingaccounts?2. Calculate a cost per account by customer category by using activity rates.3. Currently, the bank offers free checking to all of its customers. The interest revenuesaverage $90 per account; however, the interest revenues earned per account by categoryare $80, $100, and $165 for the low-, medium-, and high-balance…
Algebraic method The following chart indicates the percentage of support department services used by other departments. Service departments are designated S1, S2, and S3; operating departments are designated RP1 and RP2. Services Used S3 Department S1 S2 N/A 10% 40% N/A S1 S2 S3 20 30 N/A RP1 RP2 20% 30% 40% 30 20 10 40 10 Direct costs of the period were $170,000, $360,000, and $600,000 for S1, S2, and S3, respectively. Allocate the support department costs to the operating departments using the algebraic method. Note: Do not round proportions in your calculations; round your final answer to the nearest whole dollar. Note: Round your final answers below to the nearest 100; for example, round 8,668 to 8,700.
Account Activity and Relationships Each case is independent. Solve for missing data in alphabetical order. (Hint: Refer to Exhibit 18.6, p. 18-17 and the WIP table, p. 18-25.) Case A Case B Case C Case D Sales $425,000 Answer 550,000 Answer Direct materials 75,000 105,000 Answer 105,000 Direct labor 25,000 Answer 100,000 Answer Total direct costs Answer 160,000 Answer 150,000 Conversion cost Answer 130,000 Answer Answer Manufacturing overhead 40,000 Answer 50,000 Answer Current manufacturing costs Answer Answer 475,000 395,000 Work in process, beginning 35,000 50,000 Answer 105,000 Work in process, ending 25,000 Answer 105,000 Answer Cost of goods manufactured Answer 160,000 Answer 410,000 Finished goods inventory, beginning 45,000 40,000 35,000 60,000 Finished goods inventory, ending 30,000 Answer 40,000 Answer Cost of goods sold Answer 175,000 Answer 400,000 Gross profit…