Barstow Manufacturing Company has two service departments — product design and engineering support, and two production...

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Barstow Manufacturing Company has two service departments — product design and engineering support, and two production...

Barstow Manufacturing Company has two service departments — product design and engineering support, and two production departments — assembly and finishing. The distribution of each service department's efforts to the other departments is shown below:

FROM	TO
	Design		Support		Assembly		Finishing
Design	0	%	10	%	30	%	60	%
Support	20	%	0	%	45	%	35	%

The direct operating costs of the departments (including both variable and fixed costs) were as follows:


Design	$	330,000
Engineering Support	$	350,000
Assembly	$	1,310,000
Finishing	$	1,980,000

The total cost accumulated in the finishing department using the step method is (calculate all ratios and percentages to 4 decimal places, for example 33.3333%, and round all dollar amounts to the nearest whole dollar; assume that the design department goes first):

Multiple Choice

$2,345,563.
$4,170,000.
$1,624,438.
$1,584,438.
$1,631,104.

business accounting

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Answer 1

Answer #1

Allocation

	Design	Engineering support	Assembly	Finishing	Total
Total Cost	330000	350000	1310000	1980000	3970000
Allocation of design	-330000	33000	99000	198000
Allocation of engineering support		-383000	215438	167563
Total	0	0	1624438	2345563	3970000

So answer is a) $2345563

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Answer 2

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