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Category > Management Posted 14 Oct 2017 My Price 9.00

labor-hours in Building

Allocating Service Department Costs First to Production Departments and Then

to Jobs

Refer to the facts in Exercise 11-22. Assume that both Building A and Building B work on just two jobs during the month of June: RW-12 and RW-13. Costs are allocated to jobs based on labor-hours in Building A and machine-hours in Building B. The number of labor- and machine-hours worked in each department are as follows:

 

 

Building A

Building B

Job RW-12:

Labor-hours

160

20

 

Machine-hours

20

40

Job RW-13

Labor-hours

20

20

 

Machine-hours

20

180

Required

How much of the service department costs allocated to Building A and Building B in the direct method should be allocated to Job RW-12? How much should be allocated to Job RW-13?

Exercise 11-22 Cost Allocation: Direct Method

Warren Ltd. has two production departments, Building A and Building B, and two service departments, Maintenance and Cafeteria. Direct costs for each department and the proportion of service costs used by the various departments for the month of June follow:

Proportion of Services Used by

Department

Direct Costs

Maintenance

Cafeteria

Building A

Building B

 

 

 

 

 

 

Building A

$990,000

 

 

 

 

Building B

644,000

 

 

 

 

Maintenance

400,000

—

0.2

0.5

0.3

Cafeteria

320,000

0.8

—

0.1

0.1

Required

Compute the allocation of service department costs to producing departments using the direct method.

 

Answers

Maurice Tutor
(5)
Status NEW Posted 14 Oct 2017 10:10 PM My Price 9.00

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