Patterson Lawn Co. is the primary provider of lawn care maintenance in the city of Jasper. The Company has two operating departments, one that performs lawn care services for commercial properties and one that services residential properties. Both operating departments are supported by two service departments, administrative and machine maintenance. Costs for each of these supporting departments are as follows:
| Administrative | Machine Maintenance | ||
| Total cost | $150,000 | $225,000 | |
The following estimates that are related to the operating departments is as follows:
| Commercial | Residential | Machine Maintenance | Total | ||||||||||||
| properties | properties | ||||||||||||||
| # of employees | 40 | 20 | 15 | 75 | |||||||||||
| # of customers | 125 | 160 | n/a | 285 | |||||||||||
| # of billable hours | 3,000 | 2,000 | n/a | 5,000 | |||||||||||
| Total overhead cost | $ | 425,000 | $ | 350,000 | n/a | $ | 775,000 | ||||||||
The Company uses the step method for cost allocation as the administrative service department also provides services to the machine maintenance department. Assume that costs are allocated between service departments based on the # of employees. Using the information provided, what is the total amount of machine maintenance cost that will be allocated to the operating departments?
Multiple Choice
$30,000
$255,000
$80,000
$100,000
| Allocation of Administrative Cost | ||||||
| 150,000 | Administrative Cost | |||||
| Commercial Properties | Residential | Machine Maintenance | Total | |||
| No. of Employees | 40 | 20 | 15 | 75 | ||
| Cost Allocation based on No. of Employees | 80,000 | 40,000 | 30,000 | 150,000 | ||
| Total Machine Maintenance Cost to be allocated to Operating Deptartments. | ||||||
| Machine Maintenance Cost ( Given ) | 225,000 | |||||
| Allocated Administrative Cost | 30,000 | |||||
| Total Machine Maintenance Cost to be allocated to Operating Deptartments. | 255,000 | |||||
Patterson Lawn Co. is the primary provider of lawn care maintenance in the city of Jasper....
Patterson Lawn Co. wants to determine the cost of each lawn care maintenance job. The Company has two operating departments, one that performs lawn care services for commercial properties and one that services residential properties. Both operating departments are supported by two service departments, administrative and machine maintenance. Costs for each of these supporting departments are as follows: Administrative Machine Maintenance Total cost $150,000 $225,000 The following estimates that are related to the operating departments is as follows: Commercial Residential...
Green Thumb, Inc., is a lawn care service. The company originally specialized in serving residential clients but has recently started contracting for work with larger commercial clients. Mr. Green, the owner, is considering reducing residential services and increasing commercial lawn care. Five field employees worked a total of 11,000 hours last year—7,500 on residential jobs and 3,500 on commercial jobs. Wages were $10.00 per hour for all work done. Direct materials used were minimal and are included in overhead. All...
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $390,000 are allocated on the basis of budgeted maintenance−hours. Personnel Department costs of $190,000 are allocated based on the number of employees. The costs of operating departments A and B are $232,000 and $348,000, respectively. Data on budgeted maintenance−hours and number of employees are as follows: Support Departments Production Departments Maintenance Department Personnel Department A B Budgeted costs $390,000 $190,000 $232,000 $348,000 Budgeted maintenance−hours NA 880 1,220...
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $360,000 are allocated on the basis of budgeted maintenance−hours. Personnel Department costs of $140,000 are allocated based on the number of employees. The costs of operating departments A and B are $200,000 and $300,000, respectively. Data on budgeted maintenance−hours and number of employees are as follows: Support Departments Production Departments Maintenance Department Personnel Department A B Budgeted costs $360,000 $140,000 $200,000 $300,000 Budgeted maintenance−hours NA 860 1,210...
Elite Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial clients. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service. Twenty employees worked a total of 20,000 hours last year, 13,000 on residential jobs and 7,000 on commercial jobs. Wages were $25 per hour for all work done. Any materials used are included in overhead as supplies. All overhead is allocated on the basis...
Frederick Company has two service departments (Cafeteria Services & Maintenance). Frederick has two production departments (Assembly Department & Packaging Department.) Frederick uses a step allocation method where Cafeteria Services is allocated to all departments and Maintenance Services is allocated to the production departments. All allocations are based on total employees. Cafeteria Services has costs of $295,000 and Maintenance has costs of $175,000 before any allocations. What amount of Maintenance total cost is allocated to the Packaging Department? (round to closest...
Frederick Company has two service departments (Cafeteria Services & Maintenance). Frederick has two production departments (Assembly Department & Packaging Department.) Frederick uses a step allocation method where Cafeteria Services is allocated to all departments and Maintenance Services is allocated to the production departments. All allocations are based on total employees. Cafeteria Services has costs of $205,000 and Maintenance has costs of $195,000 before any allocations. What amount of Maintenance total cost is allocated to the Packaging Department? (round to closest...
Annapolis Company has two service departments (Computer Operations & Maintenance Services). Annapolis has two production departments (Mixing Department & Packaging Department.) Annapolis uses a direct allocation method where service departments are allocated only to production departments. All allocations are based on total employees. Computer Operations has costs of $190,000 and Maintenance Services has costs of $145,000 before any allocations. What amount of Maintenance Services total cost is allocated to the Packaging Department? (round to closest whole dollar) Employees are: Computer...
Annapolis Company has two service departments (Computer Operations & Maintenance Services). Annapolis has two production departments (Mixing Department & Packaging Department.) Annapolis uses a direct allocation method where service departments are allocated only to production departments. All allocations are based on total employees. Computer Operations has costs of $195,000 and Maintenance Services has costs of $150,000 before any allocations. What amount of Maintenance Services total cost is allocated to the Packaging Department? (round to closest whole dollar) Employees are: Computer...
Annapolis Company has two service departments (Computer Operations & Maintenance Services). Annapolis has two production departments (Mixing Department & Packaging Department.) Annapolis uses a direct allocation method where service departments are allocated only to production departments. All allocations are based on total employees. Computer Operations has costs of $105,000 and Maintenance Services has costs of $160,000 before any allocations. What amount of Maintenance Services total cost is allocated to the Packaging Department? (round to closest whole dollar) Employees are: Computer...