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53. Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs). The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Departments Direct costs 1,000 Chairs Units produced 4,000 Square metres 20,000 60,000 Number of employees 70 80 Operating Maintenance Personnel Tables $27,000 a) $27.025 per chair b) $23.509 per chair c) $25.147 per chair d) $25.900 per chair Direct costs 1,000 $24,000 $44,000 $2 6,000 10,000 2,000 Assume the direct method is used. The cost per unit in the Chair department would be: Chairs 20 40 Answer: a Difficulty: Medium Learning Objective: Explain how the direct method is used to allocate support costs to operating departments. CPA: Management Accounting Bloomcode: Application 54. Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs). The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Departments Maintenance Personnel Operating Tables $27,000 $24,000 $44,000 $2 54. Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs). The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Departments Maintenance Personnel Direct costs 1,000 Chairs Square metres 20,000 60,000 Number of employees 80 70 Units produced 4,000 a) $11,200 b) $12,503 c) $8,938 d) $12,600 $27,000 $24,000 $44,000 $2 6,000 10,000 Direct costs 1,000 Operating Tables 20 2,000 Assume the step-down method is used. The amount of cost allocated from Personnel to the Table department is: Chairs 40 Answer: d Difficulty: Medium Learning Objective: Explain how the step-down method is used to allocate support costs to operating departments. CPA: Management Accounting Bloomcode: Application 55. Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs). The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Departments Operating Maintenance Personnel Tables $27,000 $24,000 $44,000 $2 55. Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs). The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Operating Departments Maintenance Personnel Tables Direct costs 1,000 Chairs Square metres 20,000 60,000 Number of employees 80 70 Units produced 4,000 $27,000 $24,000 $44,000 $2 6,000 10,000 Departments 20 2,000 Assume the step-down method is used. The amount of cost allocated from Personnel to Maintenance is: a) $1,500 b) $1,687.50 c) $9,000 d) $0 Answer: d Difficulty: Medium Learning Objective: Explain how the step-down method is used to allocate support costs to operating departments. CPA: Management Accounting Bloomcode: Application 40 56. The accountants for Elliot, Inc. are preparing the operating departments overhead budgets. The Maintenance department direct costs are $12,000, and the Administration department direct costs are $54,000. The following data have been collected about use of services: Op3 Services Supplied By: Maintenance 25% 50% (barod on cquaro motroc) Percent of Services Used By Support Departments Operating Maint- Admin- enance istration Op1 Op2 12.5% 12.5% 53. Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs). The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Departments Direct costs 1,000 Chairs Units produced 4,000 Square metres 20,000 60,000 Number of employees 70 80 Operating Maintenance Personnel Tables $27,000 a) $27.025 per chair b) $23.509 per chair c) $25.147 per chair d) $25.900 per chair Direct costs 1,000 $24,000 $44,000 $2 6,000 10,000 2,000 Assume the direct method is used. The cost per unit in the Chair department would be: Chairs 20 40 Answer: a Difficulty: Medium Learning Objective: Explain how the direct method is used to allocate support costs to operating departments. CPA: Management Accounting Bloomcode: Application 54. Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs). The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Departments Maintenance Personnel Operating Tables $27,000 $24,000 $44,000 $2 54. Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs). The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Departments Maintenance Personnel Direct costs 1,000 Chairs Square metres 20,000 60,000 Number of employees 80 70 Units produced 4,000 a) $11,200 b) $12,503 c) $8,938 d) $12,600 $27,000 $24,000 $44,000 $2 6,000 10,000 Direct costs 1,000 Operating Tables 20 2,000 Assume the step-down method is used. The amount of cost allocated from Personnel to the Table department is: Chairs 40 Answer: d Difficulty: Medium Learning Objective: Explain how the step-down method is used to allocate support costs to operating departments. CPA: Management Accounting Bloomcode: Application 55. Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs). The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Departments Operating Maintenance Personnel Tables $27,000 $24,000 $44,000 $2 55. Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs). The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Operating Departments Maintenance Personnel Tables Direct costs 1,000 Chairs Square metres 20,000 60,000 Number of employees 80 70 Units produced 4,000 $27,000 $24,000 $44,000 $2 6,000 10,000 Departments 20 2,000 Assume the step-down method is used. The amount of cost allocated from Personnel to Maintenance is: a) $1,500 b) $1,687.50 c) $9,000 d) $0 Answer: d Difficulty: Medium Learning Objective: Explain how the step-down method is used to allocate support costs to operating departments. CPA: Management Accounting Bloomcode: Application 40 56. The accountants for Elliot, Inc. are preparing the operating departments overhead budgets. The Maintenance department direct costs are $12,000, and the Administration department direct costs are $54,000. The following data have been collected about use of services: Op3 Services Supplied By: Maintenance 25% 50% (barod on cquaro motroc) Percent of Services Used By Support Departments Operating Maint- Admin- enance istration Op1 Op2 12.5% 12.5%