C. XYZs Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs
Question:
C. XYZ’s Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $150,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $250,000 and $300,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
Support Departments | Production Departments | ||||
Warehouse Department | Data Center Department | Music | Books | ||
Budgeted costs | $350,000 | $150,000 | $250,000 | $300,000 | |
Budgeted warehouse-hours | NA | 500 | 1,000 | 1,500 | |
Number of computer hours | 200 | NA | 800 | 1,000 | |
1) Using the step-down method, what total amount of support department cost will be allocated to the Music Production Department? Allocate the Data Center Department first.
2) Using the direct method, what amount of Warehouse department costs will be allocated to the Books Department?
3) Using the reciprocal method, show the simultaneous equations used to determine the costs of providing the support department services. You do not need to solve the equations.
W =
D =
Managerial Accounting A Focus on Ethical Decision Making
ISBN: 978-0324663853
5th edition
Authors: Steve Jackson, Roby Sawyers, Greg Jenkins