Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 4, Problem 8E
A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining.
The following data have been estimated for next year’s operations:
The direct charges identified with each of the departments are as follows:
The building maintenance department services all departments of the company, and its costs are allocated using floor space occupied, while
- 1. Distribute the service department costs, using the direct method.
- 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
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Joe's Tire Company has two support departments, Personnel and Maintenance. The Maintenance Department costs
of $80,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $20,000
are allocated based on the number of employees. Costs of Departments A and B are $40,000 and $60,000,
respectively. Data on standard service hours and number of employees are as follows. How much of the cost of the
Personnel Department is allocated to Department B using the direct method? Round to the nearest dollar.
Personnel
Department
200
Standard service
hours used
Number of
employees
O A. $8,000
O B. $60,000
O C. $12,632
D. $5,000
E. $15,000
Maintenance
Department
200
10
20
CO
Production
Department A
240
40
Production
Department B
160
120
Using the direct method, compute for the factory overhead rate of the D
department if it apply overhead based on direct labor hours and budgeted direct
labor hours for the period total to 75,000 hours.
Sylvie Corporation has three production departments: K, D, and C. It also has two service
departments: Administration and Personnel. Administration costs are allocated based on value of
assets employed, and Personnel costs are allocated based on number of employees. Assume that
Administration provides more service to the other departments than does the Personnel
Department.
Department
Administration
Direct Costs Employees Asset Value
900,000
1,200,000
600,000
300,000
1,600,000
1,800,000
700,000
1,400,000
400,000
500,000
50
Personnel
20
K
30
D
10
C
20
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and
Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and
personnel costs on the basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current period:
Maintenance
Personnel
Developing
Printing
1,400
Machine-hours
1,400
4,200
Labor-hours
800
800
3,200
Department 'direct costs
$2,400
$12,400
$13,400
$10,700
Required:
Use the direct method to allocate these service department costs to the operating departments. (Negative amounts should be
indicated by a minus sign. Do not round intermediate calculations.)
Answer is not complete.
Maintenance
Personnel
Printing
Developing
Service department costs
$2$
2,400 $
12,400 O
Maintenance allocation
(2,400) O
600
1,800 V
Personnel allocation
2,480
9,920
Total costs allocated
$
2$
12,400
$ 3,080
$24
11,720
Chapter 4 Solutions
Principles of Cost Accounting
Ch. 4 - What are factory overhead expenses, and what...Ch. 4 - What are three categories of factory overhead...Ch. 4 - What are the distinguishing characteristics of...Ch. 4 - When a products cost is composed of fixed and...Ch. 4 - What effect does a change in volume have on total...Ch. 4 - Distinguish between a step-variable cost and a...Ch. 4 - What is the basic premise underlying the high-low...Ch. 4 - What are the advantages and disadvantages of the...Ch. 4 - Differentiate between an independent variable and...Ch. 4 - Prob. 10Q
Ch. 4 - What is a flexible budget, and how can management...Ch. 4 - How does accounting for factory overhead differ in...Ch. 4 - What is the function and use of each of the two...Ch. 4 - What are two types of departments found in a...Ch. 4 - What are the two most frequently used methods of...Ch. 4 - When using the sequential distribution method of...Ch. 4 - When using the sequential distribution method of...Ch. 4 - Is it possible to close the total factory overhead...Ch. 4 - What are the shortcomings of waiting until the...Ch. 4 - What are the two types of budget data needed to...Ch. 4 - Prob. 21QCh. 4 - What factory operating conditions and data are...Ch. 4 - Prob. 23QCh. 4 - How does activity-based costing differ from...Ch. 4 - What steps must a company take to successfully...Ch. 4 - What is the relationship between activity-based...Ch. 4 - Prob. 27QCh. 4 - Prob. 28QCh. 4 - If the factory overhead control account has a...Ch. 4 - Prob. 30QCh. 4 - Classify each of the following items of factory...Ch. 4 - Ames Automotive Company has accumulated the...Ch. 4 - Prob. 3ECh. 4 - Using the data in E4-2 and spreadsheet software,...Ch. 4 - El Paso Products Company has accumulated the...Ch. 4 - Computing unit costs at different levels of...Ch. 4 - Identifying basis for distribution of service...Ch. 4 - A manufacturing company has two service and two...Ch. 4 - A manufacturing company has two service and two...Ch. 4 - Compute the total job cost for each of the...Ch. 4 - Classify each of the following items of factory...Ch. 4 - Job 25AX required 5,000 for direct materials,...Ch. 4 - Job 19AB required 10,000 for direct materials,...Ch. 4 - Match each of the following cost pools with the...Ch. 4 - The books of Petry Products Co. revealed that the...Ch. 4 - The general ledger of Lawson Lumber Co. contains...Ch. 4 - Nelson Fabrication Inc. had a remaining credit...Ch. 4 - Housley Paints Co. had a remaining debit balance...Ch. 4 - The cost behavior patterns below are lettered A...Ch. 4 - Miller Minerals Co. manufactures a product that...Ch. 4 - Scattergraph method Using the data in P4-2 and a...Ch. 4 - Using the data in P4-2 and Microsoft Excel: 1....Ch. 4 - Listed below are the budgeted factory overhead...Ch. 4 - Menlo Materials is divided into five departments,...Ch. 4 - Distribution of service department costs to...Ch. 4 - Journalizing the distribution of service...Ch. 4 - Channel Products Inc. uses the job order cost...Ch. 4 - Determining job costcalculation of predetermined...Ch. 4 - Focus Fabrication Co. uses ABC. The factory...Ch. 4 - Mansfield Manufacturing Co. uses ABC. The factory...Ch. 4 - Hughes Products Inc. uses a job order cost system....Ch. 4 - Abbey Products Company is studying the results of...Ch. 4 - The following information, taken from the books of...Ch. 4 - Rockford Company has four departmental accounts:...Ch. 4 - Luna Manufacturing Inc. completed Job 2525 on May...Ch. 4 - Phillips Products, Inc. had a remaining credit...Ch. 4 - Nathan Industries had a remaining debit balance of...Ch. 4 - Chrome Solutions Company manufactures special...Ch. 4 - Activity-based Costing
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