Question

30. Hanung Corp has two service​ departments, Maintenance and Personnel. Maintenance Department costs of $310,000 are...

30.

Hanung Corp has two service​ departments, Maintenance and Personnel. Maintenance Department costs of

$310,000

are allocated on the basis of budgeted

maintenance−hours.

Personnel Department costs of

$150,000

are allocated based on the number of employees. The costs of operating departments A and B are

$184,000

and

$276,000​,

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

$310,000

$150,000

$184,000

$276,000

Budgeted

maintenance−hours

NA

880

1,300

600

Number of employees

50

NA

290

640

Using the direct​ method, what amount of Maintenance Department costs will be allocated to Department​ A? (Do not round any intermediary​ calculations.)

A.

$212,105

B.

$144,964

C.

$125,895

D.

$314,737

33.

Hugo, owner of Automated​ Fabric, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for​ analysis:

Budgeted manufacturing overhead

costs​:

     Maintenance M​ (Support Dept)

$330,000

     Personnel P​ (Support Dept)

$200,000

     Weaving W​ (Weaving Dept)

$660,000

     Colorizing C​ (Colorizing Dept)

$370,000

Services

furnished​:

By Maintenance​ (budgeted

labor−​hours):

     to Personnel

2,000

     to Weaving

8,000

     to Colorizing

4,000

By Personnel​ (Number of employees​ serviced):

     Plant Maintenance

8

     Weaving

33

     Colorizing

24

What is the complete reciprocated cost of the Maintenance​ Department? (Do not round any intermediary​ calculations.)

A.

$330,000

B.

$360,973

C.

$354,620

D.

​$0

34.

Bismite Corporation purchases trees from Cheney lumber and processes them up to the

split−off

point where two products​ (paper and pencil​ casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of​October:

Trees

processed​:

300

trees

Production​:

paper

170,000

sheets

pencil casings

170,000

Sales​:

paper

160,000

at

$0.10

per page

pencil casings

167,500

at

$0.15

per casing

The cost of purchasing

300

trees and processing them up to the

split−off

point to yield

170,000

sheets of paper and

170,000

pencil casings is

$13,500.

​Bismite's accounting department reported no beginning inventory.

What is the total sales value at the

split−off

point for​ paper?

A.

$25,500

B.

$17,000

C.

$25,125

D.

$16,000

35.

At the Wild Cat Group​ Company, the cost of the library and information center has always been charged to the various departments based upon number of employees.​Recently, opinions gathered from the department managers indicate that the number of engineers within a department might be a better predictor of library and information center costs.

Total library and information center costs are

$214,000.

Department

A

B

C

Number of employees

135

515

140

Number of engineers

20

65

10

If the number of employees is considered the cost​ driver, what amount of library and information center costs will be allocated to Department​ A? (Round any intermediary calculations two decimal places and your final answer to the nearest​ dollar.)

A.

$45,053

B.

$37,480

C.

$36,380

D.

$139,506

36.

High Tech Manufacturing​ Inc., incurred total indirect manufacturing labor costs of

$550,000.

The company is labor intensive. Total labor hours during the period were

4,500.

Using qualitative​ analysis, the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost

driver−labor−hours.

They separated the total indirect manufacturing labor costs into costs that are fixed

​($100,000

based on

9,000

hours of​ labor) and costs that are variable

​($450,000​)

based on the number of

labor−hours

used. The company has estimated

7,800

labor hours during the next period.

What will be the variable cost per​ hour?

A.

$100.00

B.

$50.00

C.

$61.11

D.

$122.22

Homework Answers

Answer #1
30)Since in the direct method, we allocate service(support) department costs only to production departments, Overheads of Maintenance and Personnel department are to be charged to A and B.
Maintenance Department costs of

$310,000

are allocated on the basis of budgeted

maintenance−hours.
Hence, $310,000 is allocated to A and B in the ratio of 1300:600.
Maintenance Department cost allocated to A = 1300*310000/1900
212105
Threfore, Option A is correct.
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