Question

Jacksonville Instrument Company manufactures gauges for construction machinery. The company has two production departments: Machining and Finishing. There are three service departments: Human Resources (HR), Maintenance, and Design. The budgeted costs in Jacksonville Instrument Company’s service departments during the year are as follows:


The usage of these service departments’ output during the year just completed is as follows:


Required:
1. Use the direct method to allocate Jacksonville Instrument Company’s service department costs to its production departments.
2. Determine the proper sequence to use in allocating the firm’s service department costs by the step-down method.
3. Use the step-down method to allocate the company’s service department costs.
4. Build a spreadsheet: Construct an Excel spreadsheet to solve requirements (1) and (3) above. Show how the solution will change if the following information changes: the budgeted variable costs in the three departments are $60,000, $70,000, and $55,000, for Human Resources, Maintenance, and Design,respectively.


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  • CreatedApril 22, 2014
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