Strzelecki Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow: Service Departments Service Operating Departments Operating Service Operating Department A Department B $ 43,000 Department Y $ 311,700 Department X $ 31,000 $ 251,800 Departmental costs Allocation base A 4,900 2,000 26,000 12,000 Allocation base B 6,000 2,000 32,000 4,000 Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B. The total Operating Department Y cost after allocations is closest to: Multiple Choice $321,000 3 of 10 Next > Prev

Strzelecki Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow: Service Departments Service Operating Departments Operating Service Operating Department A Department B $ 43,000 Department Y $ 311,700 Department X $ 31,000 $ 251,800 Departmental costs Allocation base A 4,900 2,000 26,000 12,000 Allocation base B 6,000 2,000 32,000 4,000 Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B. The total Operating Department Y cost after allocations is closest to: Multiple Choice $321,000 3 of 10 Next > Prev

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter24: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 3E

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What are the differences between single and dual rate allocation? Explain with suitable examples. b) Provide a numerical example for single rate allocation and dual rate allocation and explain the process of allocating support department costs to the operating department, assuming that: The company has two support departments “S1 & S2” and two operating departments “O1 & O2.” The company use the direct method to allocate support department costs. Note: You are required to provide numerical examples assuming the values of your own and they should not be copied from any sources.
Q. Allocate the service department costs to the two operating departments using(i) the step-down method (Allocate Administrative Services first)(ii) the step-down method (Allocate Maintenance Services first)
A company has three departments; production, finishing and service department with inter-departmental services. Which of the following is not true? OA. The service department cost will be reallocated to other departments OB. The service department overhead cost will not form part of the overhead cost to be charged to the product since it does not relate to production OC. None of the above OD. Service department overhead can be reallocated using percentage of service rendered to other departments
The step-down allocation method: a. recognizes the total amount of services that support departments provide to each other b. allocates complete reciprocated costs c. typically begins with the support department that provides the highest percentage of its total services to other support departments d. offers key input for outsourcing decisions
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs Service department costs IT allocation HR allocation Total costs allocated $ IT IT 0 25 $ 159,000 Required: Use the direct method to allocate these service department costs to the operating departments. Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. Round "Publishing" and "Binding" answers to 2 decimal places. HR 1,100 0 $ 247,500 0 $ HR Publishing 1,100 33 $ 430,000 0 $ Publishing Binding 3,300 49 $ 390,000 0.00 $ Binding 0.00
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs Service department costs IT allocation HR allocation Total costs allocated IT IT 0 33 $ 157,000 HR HR 1,500 0 $ 247,500 Publishing 1,500 41 $ 430,000 Required: Use the direct method to allocate these service department costs to the operating departments. Note: Amounts to be deducted should be Indicated by a minus sign. Do not round Intermediate calculations. Round "Publishing" and "Binding" answers to 2 decimal places. Binding Publishing 4,500 57 $ 390,000 AL Binding
Which one of the following is not a step in allocating the support department cost to the production department? Select one: a. Trace all the overhead cost b. Divide the departments in to support and producing departments c. Undertake a breakeven analysis d. Divide the company in departments
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: \table[[,IT,HR,Publishing,Binding],[,0,1,550,2,480,2,170],[IT tickets,16,0,24,40],[\table[[Employees],[Department direct costs]],$154,000,$248,400,$432,000,$395,000
Required information [The following information applies to the questions displayed below.] Fifth Street Publishing (FSP) was founded many years ago as a printing cooperative offering printing services to members. Most members were charitable and religious organizations. Ten years ago, FSP became a for-profit corporation, although it retained its commitment to the original member groups. It has two production departments, Member and Commercial. The Member Department handles printing jobs for nonprofit groups and Commercial serves the remaining customers. FSP is organized this way to facilitate its billing: FSP charges nonprofit customers a price equal to the full cost of the job, including allocated overhead; commercial jobs are priced based on what the market will bear. FSP has two service departments, Accounting and Computer Services (CS). Accounting costs are allocated based on number of employees, and CS costs are allocated based on computer time (hours). Selected percentage use…
Required information [The following information applies to the questions displayed below.] Data Performance, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Carol Bingham, a pricing analyst, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Carol is considering three different methods of the departmental allocation approach to allocate overhead costs: the direct method, the step method, and the reciprocal method. She assembled the following data from the two service departments, information systems and facilities: a. b. Budgeted overhead (base) Information Systems (computer hours) Facilities (square feet) C. Service Departments Information Systems $ 368,000 240 Direct Method Step Method (Information Systems Goes First) Step Method (Facilities Goes First) Reciprocal method Computer…
A company has several service departments that provide differing amounts of service to each other and to the company's operating departments. Which of the following statements is true? a. The direct method and the step method will result in the same amount of cost being allocated to each operating department. b. The direct method will result in the same amount of cost being allocated to each operating department regardless of which service department is allocated first. c. The step method will result in the same amount of cost being allocated to each operating department regardless of which service department is allocated first. d. All of the above are true.
AI Rawabi company consist of two support departments (Administration and R& D) and two operating departments (Manufacturing & Assembling). The cost of Administration department is allocated based on number of employees and the cost of R& D department is allocated based on research hours. The table below shows the cost details. Allocate the cost of the support departments to the operating departments using step-down method. How much is the Assembling department total cost after cost allocation: Support Departments Operating Departments R&D Manufacturing Assembling Total Cost Admin Cost: Salaries 30000 60000 44000 70000 204000 Supplies 10000 30000 25000 30000 95000 Total 40000 90000 69000 100000 299000 Allocation Base: Research Hours 200 300 450 250 Number of Employees 7 10 9 13 Select one: O a. RO 155775 O b. RO 162090.3 O c. RO 143225 O d. 136909.7