Homework Answers
| Answer | |||||
| Costs allocated to Etching | $392,000 | ||||
| Costs allocated to Finishing | $426,000 | ||||
| Total costs to be allocated | $818,000 | ||||
| Working Notes | |||||
| To allocate the service department which are cross functional | |||||
| we will have to use reciprocal direct cost allocation method to | |||||
| apportion the service department costs | |||||
| We will use the following approach to compute the same | |||||
| (i) Calculate the proportion in which the service department | |||||
| costs are allocated | |||||
| Proportion | |||||
| Maintenance | Computing | Maintenance | Computing | ||
| Maintenance | 240,000 | - | 0.20 | ||
| Computing | 1,000 | 0.10 | - | ||
| Etching | 1,000 | 840,000 | 0.10 | 0.70 | |
| Finishing | 8,000 | 120,000 | 0.80 | 0.10 | |
| 10,000 | 1,200,000 | 1.00 | 1.00 | ||
| Equation -1 | |||||
| Total Maintenance Department Costs allocated to the two Production departments | |||||
| = $ 48,000 + 0.20*(Computing Department Costs) | |||||
| Equation -2 | |||||
| Total Computing Costs allocated to the two Production departments | |||||
| = $ 250,000 + 0.10*(Maintenance Department Costs) | |||||
| Now, substituting the allocated maintenance department costs in the equation 2 | |||||
| Computing Department Costs | |||||
| =$ 250,000 +0.10*($ 48,000+0.20*(Computing Department Costs) | |||||
| = $ 250,000 + 0.10* $ 48,000 + 0.10*0.20*(Computing Department Costs) | |||||
| Computing Department Costs = $ 250,000 + $ 4,800 + 0.02* Computing Department Costs | |||||
| =$ 254,8000 = 1*Computing Department Costs -0.02* Computing Department Costs | |||||
| Computing Department Costs* (1 - 0.02) = $ 254,800 | |||||
| Computing Department Costs* 0.98 = $ 254,800 | |||||
| Computing Department Costs = $ 254,800/0.98 | |||||
| Computing Department Costs = $ 260,000 | |||||
| Subsituting the value of Computing Department Costs in equation 1 | |||||
| = $ 48,000 + 0.20*(Computing Department Costs) | |||||
| = $ 48,000 + 0.20*($ 260,000) | |||||
| = $ 48,000 + $ 52,000 | |||||
| = $ 100,000 | |||||
| Allocation of Service Department Overheads | |||||
| Maintenance | Computing | Etching | Finishing | ||
|
Overheads before allocation |
$48,000 | $250,000 | |||
|
Maintenace Allocation |
($100,000) | $10,000 | $10,000 | $80,000 | |
|
Computing Allocation |
$52,000 | ($260,000) | $182,000 | $26,000 | |
| Total | $0 | $0 | $192,000 | $106,000 | |
| Costs allocated to Production Departments | |||||
| Allocated | Budgeted | Total | |||
| Etching | $192,000 | $200,000 | $392,000 | ||
| Finishing | $106,000 | $320,000 | $426,000 | ||
| $298,000 | $520,000 | $818,000 | |||
| b. | |||||
| Answer | |||||
| Etching | Finishing | ||||
|
Overhead rate per hour |
$9.80 | $2.66 | |||
| Working Notes | |||||
| Computation of Total direct labor hours | |||||
| Department | No. of
people employed |
Hours
per year per person |
Total
direct labor hours |
||
| Etching | 20 | 2,000 | 40,000 | ||
| Finishing | 80 | 2,000 | 160,000 | ||
| Total direct labor hours | 200,000 | ||||
|
Total Overheads |
Total
direct labor hours |
Overheads rate | |||
| Etching | $392,000 | 40,000 | $9.80 | ||
| Finishing | $426,000 | 160,000 | $2.66 | ||
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Required information [The following information applies to the questions displayed below.) Celestial Artistry Company is developing...
Required information [The following information applies to the questions displayed below.) Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people and the Finishing Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Etching Department are budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service departments, Maintenance...
plzz help 4 Problem 17-33 Reciprocal-Service Method (Appendix) (LO 17-6) points Celestial Artistry Company is developing...
plzz help
4 Problem 17-33 Reciprocal-Service Method (Appendix) (LO 17-6) points Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 25 people and the Finishing Department employs 75 people. Each person in these two departments works 1,700 hours per year. The production- related overhead costs for the Etching Department are budgeted at $170,000, and the Finishing Department costs are budgeted at $290,000. Two service departments,...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people and the Finishing Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Etching Department are budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service departments, Maintenance and Computing, directly support the two production departments. These service departments...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 30 people and the Finishing Department employs 70 people. Each person in these two departments works 1,800 hours per year. The production-related overhead costs for the Etching Department are budgeted at $220,000, and the Finishing Department costs are budgeted at $340,000. Two service departments, Maintenance and Computing, directly support the two production departments. These service departments...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production...
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Problem 17-33 Reciprocal-Service Method (Appendix) (LO 17-6) Celestial Artistry Company is developing departmental overhead rates based...
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Required information [The following information applies to the questions displayed below.) Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people and the Finishing Department employs 80 people. Each person in these two departments works 2,000 hours per year. The production-related overhead costs for the Etching Department are budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service departments, Maintenance...
plzz help
4 Problem 17-33 Reciprocal-Service Method (Appendix) (LO 17-6) points Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 25 people and the Finishing Department employs 75 people. Each person in these two departments works 1,700 hours per year. The production- related overhead costs for the Etching Department are budgeted at $170,000, and the Finishing Department costs are budgeted at $290,000. Two service departments,...
Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 30 people and the Finishing Department employs 70 people. Each person in these two departments works 1,800 hours per year. The production-related overhead costs for the Etching Department are budgeted at $220,000, and the Finishing Department costs are budgeted at $340,000. Two service departments, Maintenance and Computing, directly support the two production departments. These service departments...
Problem 17-33 Reciprocal-Service Method (Appendix) (LO 17-6) Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours for its two production departments, Etching and Finishing. The Etching Department employs 20 people and the Finishing Department employs 80 people. Each person in these two departments works 1,200 hours per year. The pr at $120,000, and the Finishing Department costs are budgeted at $240,000. Two service departments, Maintenance and Computing. directly support the two production departments. These service departments have...
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Complete this question by entering your answers in the tabs below. Reg 1A Reç 14 Reg 1B Reç 18 Reg 2A Reg za Reg 28 Reg 2B Req3 Reg 3 Assume the company uses absorption costing. Compute the unit product cost for Year 1 and Year 2. (Round your answer to 2 decimal places.) Year 1 Year 2 Unit product cost < Reg 1B Reg 2B> Walsh Company manufactures and sells one product. The following information pertains to each of...
correct answers only please!
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