Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 5, Problem 7E
To determine
Allocate the support department costs to the production departments using the direct method.
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Prism Company has two service departments: security departments and maintenance departments that give services to two producing departments: machining department and assembling department. Security department costs will be allocated using the number of employees and maintenance department costs will be allocated using direct labor hours. For calculation of predetermined rate, machine hours and direct labor hours are used for machining and assembling departments, respectively.
Mirabile Corporation uses activity-based costing to compute product margins. Overhead costs have already been allocated to the company's
three activity cost pools--Processing, Supervising, and Other. The costs in those activity cost pools appear below:
Processing
Supervising
Other
Processing costs are assigned to products using machine-hours (MHs) and Supervising costs are assigned to products using the number of
batches. The costs in the other activity cost pool are not assigned to products. Activity data appear below:
Product MO
Product M5
Total
$ 3,800
$ 23,800
$ 10,400
MHs (Processing)
9,700
300
10,000
Sales (total)
Direct materials (total)
Direct labor (total)
Batches
(Supervising)
500
500
1,000
Finally, sales and direct cost data are combined with Processing and Supervising costs to determine product margins.
Product Mº
$ 74,100
$ 28,500
$ 27,800
Product M5
$ 89,900
$ 31,400
$ 41,700
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
Chapter 5 Solutions
Managerial Accounting
Ch. 5 - Why are support department costs difficult to...Ch. 5 - Why does support department cost allocation matter...Ch. 5 - What are some drawbacks of applying support...Ch. 5 - Why is the diect method of support department cost...Ch. 5 - How does management determine the order in which...Ch. 5 - Are large or small companies more likely to use...Ch. 5 - What is the main difference between the physical...Ch. 5 - When would management most likely use the net...Ch. 5 - What are the two most often used ways of...Ch. 5 - How can support department and joint cost...
Ch. 5 - Charlies Wood Works produces wood products (e.g.,...Ch. 5 - Bucknum Boys, Inc., produces hunting gear for buck...Ch. 5 - Prob. 3BECh. 5 - Blakes Blacksmith Co. produces two types of...Ch. 5 - Garys Grooves Co. produces two types of carving...Ch. 5 - Prob. 6BECh. 5 - Yo-Down Inc. produces yogurt. Information related...Ch. 5 - Prob. 2ECh. 5 - Blue Africa Inc. produces laptops and desktop...Ch. 5 - Christmas Timber, Inc., produces Christmas trees....Ch. 5 - Crystal Scarves Co. produces winter scarves. The...Ch. 5 - Davis Snowflake Co. produces Christmas stockings...Ch. 5 - Prob. 7ECh. 5 - Prob. 8ECh. 5 - Prob. 9ECh. 5 - Support department cost allocation comparison...Ch. 5 - Prob. 11ECh. 5 - Prob. 12ECh. 5 - Joint cost allocation market value at split-off...Ch. 5 - Joint cost allocation net realizable value method...Ch. 5 - Prob. 15ECh. 5 - Prob. 16ECh. 5 - Joint cost allocation-market value at split-off...Ch. 5 - Joint cost allocation net realizable value method...Ch. 5 - Support department cost allocation Blue Mountain...Ch. 5 - Support activity cost allocation Jakes Gems mines...Ch. 5 - Joint cost allocation Lovely Lotion Inc. produces...Ch. 5 - Joint cost allocation Florissas Flowers jointly...Ch. 5 - Support department cost allocation Hooligan...Ch. 5 - Support activity cost allocation Kizzles Crepes...Ch. 5 - Joint cost allocation McKenzies Soap Sensations,...Ch. 5 - Prob. 4PBCh. 5 - Analyze Milkrageous, Inc. Milkragcous, Inc., a...Ch. 5 - Analyze Horsepower Hookup, Inc. Horsepower Hookup,...Ch. 5 - Prob. 3MADCh. 5 - Prob. 4MADCh. 5 - Joint cost allocation and performance evaluation...Ch. 5 - Prob. 3TIFCh. 5 - Prob. 1CMACh. 5 - Adam Corporation manufactures computer tables and...Ch. 5 - Breegle Company produces three products (B-40,...Ch. 5 - Tucariz Company processes Duo into two joint...
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