Marion's Muffins (MM) manufactures a variety of baked products. MM has two principal operating departments, Baking...

 

Transcribed Image Text:

Marion's Muffins (MM) manufactures a variety of baked products. MM has two principal operating departments, Baking and Packaging, and two support departments, Maintenance and Human Resources. The base used to allocate Maintenance is total maintenance hours. The base used to allocate Human Resources is number of labour hours for a department. The Maintenance budget is $350,000, while the Human Resources budget is $950,000. To run the Baking and Packaging departments the costs are $2,500,000 and $1,5000 respectively before any allocations from Maintenance or HR. The following chart summarizes budgeted allocation-base amounts used by each department: Maintenance Hours Labour Hours Maintenance 1,000 4,000 Human Resources Human Resources $ 950,000 2,000 6,000 Baking Maintenance 5,000 $ 350,000 20,000 Required: 1. Prepare a schedule which allocates service department costs using the step-down method with the sequence of allocation based on the largest service department first. Compute the total cost of running the Baking and Packaging departments including their share from the two service departments. (12 marks) Packaging 3,000 16,000 Baking $2,500,000 Packaging $1,500,000 2. For the reciprocal method of service department cost allocation, identify the equations that you would use to determine total cost of Maintenance, and Human Resources. You do not need to calculate the cost allocations, only provide the equations that would be used in the calculations. (4 marks) 3. Choose from among the following terms, and fill in the blanks for the subsequent sentences. (4 marks) 3. 2. A artificial cost pools core operating division cause and effect step / sequential price taker common cost value leadership core divisions direct economies of scale stand-alone cost allocation method 1. The method is an improvement over the method of applying support costs, but it still only reports the flow of support departments to one another in one direction. The method is considered the theoretically best approach to allocating support department costs. reciprocal dual-rate guide cost allocation decisions. ability to bear benefits provided incremental cost allocation method arises when two or more users share benefits from consuming a corporate resource. There are two ways to recognize proportional cost and benefit. The defines each cost object as if it were the only output. The ranks those who share in benefits from incurring the total common cost pool from high to low. The highest ranked is the primary party who bears most of the total shared cost. The remaining incremental parties share the difference of the total common cost pool minus the costs allocated to the primary party and are two criteria to help Marion's Muffins (MM) manufactures a variety of baked products. MM has two principal operating departments, Baking and Packaging, and two support departments, Maintenance and Human Resources. The base used to allocate Maintenance is total maintenance hours. The base used to allocate Human Resources is number of labour hours for a department. The Maintenance budget is $350,000, while the Human Resources budget is $950,000. To run the Baking and Packaging departments the costs are $2,500,000 and $1,5000 respectively before any allocations from Maintenance or HR. The following chart summarizes budgeted allocation-base amounts used by each department: Maintenance Hours Labour Hours Maintenance 1,000 4,000 Human Resources Human Resources $ 950,000 2,000 6,000 Baking Maintenance 5,000 $ 350,000 20,000 Required: 1. Prepare a schedule which allocates service department costs using the step-down method with the sequence of allocation based on the largest service department first. Compute the total cost of running the Baking and Packaging departments including their share from the two service departments. (12 marks) Packaging 3,000 16,000 Baking $2,500,000 Packaging $1,500,000 2. For the reciprocal method of service department cost allocation, identify the equations that you would use to determine total cost of Maintenance, and Human Resources. You do not need to calculate the cost allocations, only provide the equations that would be used in the calculations. (4 marks) 3. Choose from among the following terms, and fill in the blanks for the subsequent sentences. (4 marks) 3. 2. A artificial cost pools core operating division cause and effect step / sequential price taker common cost value leadership core divisions direct economies of scale stand-alone cost allocation method 1. The method is an improvement over the method of applying support costs, but it still only reports the flow of support departments to one another in one direction. The method is considered the theoretically best approach to allocating support department costs. reciprocal dual-rate guide cost allocation decisions. ability to bear benefits provided incremental cost allocation method arises when two or more users share benefits from consuming a corporate resource. There are two ways to recognize proportional cost and benefit. The defines each cost object as if it were the only output. The ranks those who share in benefits from incurring the total common cost pool from high to low. The highest ranked is the primary party who bears most of the total shared cost. The remaining incremental parties share the difference of the total common cost pool minus the costs allocated to the primary party and are two criteria to help

Answer rating: 100% (QA)

Please see the images below for the stepdown cost allocation schedule and the reciprocal cost alloca... View the full answer