Explain the process of cost allocation. Identify the components of a products cost. Explain how material, labor,
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- Explain the process of cost allocation.
- Identify the components of a product’s cost.
- Explain how material, labor, and overhead costs are added to a product at each stage of the production process.
- Understand the relation between cost, volume and profit, and how to use CVP-analysis to evaluate data and decisions.
- Describe the three basic types of product costing systems (job, process and operations) and calculate product costs using these systems.
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Youth Athletic Services (YAS) provides adult supervision for organized youth athletics. It has a president, William Mayes, and five employees. He and one of the other five employees manage all marketing and administrative duties. The remaining four employees work directly on operations. YAS has four service departments: managing, officiating, training, and dispute resolution. A time card is marked and records are kept to monitor the time each employee spends working in each department. When business is slow, there is idle time, which is marked on the time card. (It is necessary to have some idle time because some direct labor-hours must be available to accommodate fluctuating peak demand periods throughout the day and the week.) Some of the July operating data are as follows: Sales revenue Direct labor (in hours) Direct overhead traceable to departments: Equipment Supplies Transportation . ♦ . Idle Time . 25 Managing Officiating $8,850 320 $1,140 $390 $565 $9,800 110 In addition to salaries paid, other administrative costs were $320. All revenue transactions are cash; all others are on account. No inventories are kept. $1,065 $490 $1,190 Training $4,400 155 Other Data: The four employees working in the operating departments all make $18 per hour. • The fifth employee, who helps manage marketing and administrative duties, earns $3,200 per month, and William earns $3,950 per month. Indirect overhead amounted to $1,168 and is assigned to departments based on the number of direct labor- hours used. Because there are idle hours, some overhead will not be assigned to a department. In addition to salaries paid, marketing costs for items, such as advertising and special promotions totaled $790. $890 $440 $275 Dispute Resolution $2,100 120 $15 $390 $80 Youth Athletic Services (YAS) provides adult supervision for organized youth athletics. It has a president, William Mayes, and five employees. He and one of the other five employees manage all marketing and administrative duties. The remaining four employees work directly on operations. YAS has four service departments: managing, officiating, training, and dispute resolution. A time card is marked and records are kept to monitor the time each employee spends working in each department. When business is slow, there is idle time, which is marked on the time card. (It is necessary to have some idle time because some direct labor-hours must be available to accommodate fluctuating peak demand periods throughout the day and the week.) Some of the July operating data are as follows: Sales revenue Direct labor (in hours) Direct overhead traceable to departments: Equipment Supplies Transportation . ♦ . Idle Time . 25 Managing Officiating $8,850 320 $1,140 $390 $565 $9,800 110 In addition to salaries paid, other administrative costs were $320. All revenue transactions are cash; all others are on account. No inventories are kept. $1,065 $490 $1,190 Training $4,400 155 Other Data: The four employees working in the operating departments all make $18 per hour. • The fifth employee, who helps manage marketing and administrative duties, earns $3,200 per month, and William earns $3,950 per month. Indirect overhead amounted to $1,168 and is assigned to departments based on the number of direct labor- hours used. Because there are idle hours, some overhead will not be assigned to a department. In addition to salaries paid, marketing costs for items, such as advertising and special promotions totaled $790. $890 $440 $275 Dispute Resolution $2,100 120 $15 $390 $80
Expert Answer:
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To analyze the cost allocations and determine the profitability of the service departments and the overall organization we need to calculate the total costs for each department and then allocate the i... View the full answer
Related Book For
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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