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Stephanie Company Stephanie Company has two production departments: D and J. Stephanie also has 3 service...

Stephanie Company

Stephanie Company has two production departments: D and J. Stephanie also has 3 service departments: Personnel, Administration, and Shipping. Shipping costs are allocated on the basis of number of packages, while Personnel and Administration costs are allocated using number of employees. Assume that the ranking of the benefits provided is in the order listed below.

Department

Costs

Employees

# of Packages

Personnel

$400,000

6

3,000

Administration

800,000

20

4,000

Shipping

700,000

12

24,500

D

500,000

10

5,000

J

400,000

15

6,000

Refer to Stephanie Company. Using the direct method, what amount of personnel costs is allocated to Department J (rounded to the nearest $)?

a.

$120,000

b.

$240,000

c.

$300,000

d.

$360,000

Refer to Stephanie Company. Using the step method, what amount of Personnel costs is allocated to Department D (rounded to the nearest $)?

a.

$ 70,175

b.

$105,263

c.

$157,895

d.

$240,000

Refer to Stephanie Company. Using the step method, what amount of Shipping costs is allocated to Department J (rounded to the nearest $)?

a.

$ 97,561

b.

$216,216

c.

$280,000

d.

$643,784
Business   Accounting   
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Homework Answers

Answer #1

1) Personnel cost allocated to department J under direct method = 400000*15/25 = 240000

So answer is b) $240000

2) Personnel cost allocated to department D under step method = 400000*10/57 = 70175

So answer is a) $70175

3) Personnel cost allocated to shipping = 400000*12/57 = 84211

Personnel cost allocated to administration = 400000*20/57 = 140351

Administrative cost allocated to shipping = (140351+800000)*12/37 = 304979

Shipping cost = 84211+304979+700000 = 1089190

Shipping cost allocated to department J = 1089190*6000/11000 =

So answer is d) $643784

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