3. Support Department Cost Allocation—Reciprocal Services Method
Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Security departments support the production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security Department are allocated based on asset value. Relevant department information is provided in the following table:
Janitorial Department |
Security Department |
Molding Department |
Assembly Department |
||||
Square feet | 600 | 3,600 | 3,600 | 1,800 | |||
Asset value | $100 | $120 | $900 | $1,000 | |||
Department cost | $2,100 | $1,800 | $10,400 | $12,700 |
Using the reciprocal services method of support department cost allocation, determine:
a. The percentage of Janitorial costs that should be allocated to the Security Department.
b. The percentage of Security costs that should be allocated to the Janitorial Department.
4. Joint Cost Allocation—Physical Units Method
Blake’s Blacksmith Co. produces two types of shotguns, a 12-gauge and 20-gauge. The shotguns are made through a joint production process that ultimately produces 35 12-gauge shotguns and 35 20-gauge shotguns and costs a total of $3,700 per batch. After the split-off point, each type of shotgun goes through an additional crafting process before it is sold. The additional production process of the 12-gauge shotgun costs $35 per gun, after which it is sold for $184 per gun. The additional production process of the 20-gauge shotgun costs $24 per gun, after which it is sold for $154 per gun.
Determine the amount of joint production costs allocated to each type of shotgun using the physical units method.
Joint Product | Allocation |
12-gauge shotgun | $ |
20-gauge shotgun | |
Totals | $ |
5. Joint Cost Allocation—Weighted Average Method
Gary’s Grooves Co. produces two types of carving knives, one with a handle made of a polymer that looks like walnut wood and another with a handle made with a polymer that looks like red oak. The knives are made through a joint production molding process that produces 301 knife blades for red oak handle knives and 258 knife blades for walnut handle knives at the split-off point. The polymer for the red oak handle knife blades requires twice as much cooling time as the polymer for the walnut handle knife blades, although all knives are removed from the joint molding process at the same time (i.e., once the cooling for the red oak handle knives is complete). The joint production process costs a total of $5,000.
Assuming the company allocates joint costs using the weighted average method based on the required cooling time of the two joint products, determine the amount of joint production costs allocated to each type of knife using the weighted average method.
Joint Product | Allocation |
Red oak handle carving knife | $ |
Walnut handle carving knife | |
Totals | $ |
3.
a.
Percentage of Janitorial costs to be allocated to Security Department = 3,600 / (3,600 + 3,600 + 1,800) = 40%
b.
Percentage of Security costs to be allocated to Janitorial Department = 100 / (100 + 900 + 1,000) = 5%
.
4.
Joint cost allocation | ||
Physical units | Joint cost allocated | |
12-gauge | 35 | $1,850 ($3,700 * 35 / 70) |
20-gauge | 35 | $1,850 ($3,700 * 35 / 70) |
Total | 70 | $3,700 |
.
5.
Gary’s Grooves | Red Oak | Walnut | Total | Note |
Units Produced | 301.00 | 258.00 | A | |
Weights assigned | 2.00 | 1.00 | B | |
Weighted production units | 602.00 | 258.00 | 860.00 | C=A*B |
Joint costs | 5,000.00 | D | ||
Cost per Weighted units | 5.81 | E=D/C | ||
Cost per units | 11.63 | 5.81 | F=E*B | |
Cost allocated | 3,500 | 1,500 | 5,000 | G=F*A |
.
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3. Support Department Cost Allocation—Reciprocal Services Method Brewster Toymakers Inc. produces toys for children. The toys...
oint Cost Allocation—Weighted Average Method Gary’s Grooves Co. produces two types of carving knives, one with a handle made of a polymer that looks like walnut wood and another with a handle made with a polymer that looks like red oak. The knives are made through a joint production molding process that produces 344 knife blades for red oak handle knives and 172 knife blades for walnut handle knives at the split-off point. The polymer for the red oak handle...
Joint Cost Allocation—Weighted Average Method Gary’s Grooves Co. produces two types of carving knives, one with a handle made of a polymer that looks like walnut wood and another with a handle made with a polymer that looks like red oak. The knives are made through a joint production molding process that produces 330 knife blades for red oak handle knives and 220 knife blades for walnut handle knives at the split-off point. The polymer for the red oak handle...
Support Department Cost Allocation-Reciprocal Services Method Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Se p artme production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security Department are located based on Relevant department information is provided in the following table: Janitorial Security Molding Assembly Department Department Department Department Square feet 640 700 700 5,600 Asset value $360 $380...
BE 19-3 Support department cost allocation-reciprocal services method Obj. 3 Brewster Toymakers Inc. produces toys for children. The toys are produced in the Molding and Assembly departments. The Janitorial and Security departments support the production of the toys. Costs from the Janitorial Department are allocated based on square feet. Costs from the Security (Continued) at information is provided in the 19 Support Department and Jollit COUL Department are allocated based on asset value. Relevant department informati following table: Janitorial Security...
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