Question 1

Indirect Cost Allocation: Direct Method
Sprint Manufacturing Company has two production departments, Melting and Molding. Direct general plant management and plant security costs benefit both production departments. Sprint allocates general plant management costs on the basis of the number of production employees and plant security costs on the basis of space occupied by the production departments. In November, the following overhead costs were recorded:

Melting Department direct overhead	$ 175,000
Molding Department direct overhead	300,000
General plant management	90,000
Plant security	35,000

 

Â	Melting	Molding
Number of employees	25	45
Space occupied (square feet)	10,000	40,000
Machine hours	10,000	2,000
Direct labor hours	4,000	20,000

(a) Prepare a schedule allocating general plant management costs and plant security costs to the Melting and Molding Departments. (Round your answer to the nearest whole number. Do not round until your final answer.)

Department	Total	Melting	Molding
General Plant Management	$Answer	$Answer	$Answer
Plant security	$Answer	$Answer	$Answer

(b) Determine the total departmental overhead costs for the Melting and Molding Departments.
Melting $Answer
Molding $Answer
(c) Assuming the Melting Department uses machine hours and the Molding Department uses direct labor hours to apply overhead to production, calculate the overhead rate for each production department. (Round your answers to two decimal places.)
Melting $Answer
Molding $Answer

 

Question 2

Inventory Ratio Calculations
Delroi, Inc. provided the following data for 2013 and 2014:

Inventory	Â
December 31, 2012	$ 202,400
December 31, 2013	190,400
December 31, 2014	182,500
Cost of goods sold	Â
2013	$ 642,000
2014	724,000
Gross margin	Â
2013	$ 340,000
2014	410,000

Round all calculations to two decimal places.
(a) Calculate the inventory turnover ratio for 2013 and 2014.
2013 Answer times
2014 Answer times
(b) Calculate the gross margin return on inventory investment for 2013 and 2014.
2013 Answer
2014 Answer

 

 

 

 

Question 3

Interdepartment Services: Step Method
O'Brian's Department Stores allocates the costs of the Personnel and Payroll departments to three retail sales departments, Housewares, Clothing, and Furniture. In addition to providing services to the operating departments, Personnel and Payroll provide services to each other. O'Brian's allocates Personnel Department costs on the basis of the number of employees and Payroll Department costs on the basis of gross payroll. Cost and allocation information for June is as follows:

Â	Personnel	Payroll	Housewares	Clothing	Furniture
Direct department cost	$ 7,800	$ 3,200	$ 12,200	$ 20,000	$ 16,750
Number of employees	5	4	8	16	4
Gross payroll	$ 6,000	$ 3,300	$ 10,600	$ 17,400	$ 8,100

(a) Determine the percentage of total Personnel Department services that was provided to the Payroll Department. (Round your answer to one decimal place.)
Answer %
(b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department. (Round your answer one decimal place.)
Answer %
(c) Prepare a schedule showing Personnel Department and Payroll Department cost allocations to the operating departments, assuming O'Brian's uses the step method.

For each department below, enter the total costs calculated from your schedule.

Do not round until your final answers. Round answers to the nearest dollar.

Â	Service Departments		Producing Departments
Â	Payroll	Personnel	Housewares	Clothing	Furniture
Total costs	$Answer	$Answer	$Answer	$Answer	$Answer