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Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Maintenance Department 800 $2,000 $29,520 Feedback Security Department 2,000 $1,400 $13,120 Production departments total costs $ Machine hours Asset value Department cost Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Department Cutting Department 6,400 $3,000 $66,000 Sewing Department X S Sewing Department 11,600 $5,000 $85,000 X Check My Work The reciprocal services method considers all inter-support-department service, and thus is the most accurate of the three support department allocation methods. The proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated must be determined. Then, the support department costs are allocated simultaneously among the departments.

Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Maintenance Department 800 $2,000 $29,520 Feedback Security Department 2,000 $1,400 $13,120 Production departments total costs $ Machine hours Asset value Department cost Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Department Cutting Department 6,400 $3,000 $66,000 Sewing Department X S Sewing Department 11,600 $5,000 $85,000 X Check My Work The reciprocal services method considers all inter-support-department service, and thus is the most accurate of the three support department allocation methods. The proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated must be determined. Then, the support department costs are allocated simultaneously among the departments.

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 6E: Davis Snowflake Co. produces Christmas stockings in its Cutting and Sewing departments. The...
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Support department cost allocation-reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Maintenance Department 800 $2,000 $29,520 Production departments' total costs Feedback Security Department Machine hours 2,000 Asset value $1,400 Department cost $13,120 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Department Cutting Department X Sewing Department X Sewing Department 6,400 $3,000 $66,000 11,600 $5,000 $85,000 ▼ Check My Work The reciprocal services method considers all inter-support-department service, and thus is the most accurate of the three support department allocation methods. The proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated must be determined. Then, the support department costs are allocated simultaneously among the departments.
Transcribed Image Text:Support department cost allocation-reciprocal services method Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table: Maintenance Department 800 $2,000 $29,520 Production departments' total costs Feedback Security Department Machine hours 2,000 Asset value $1,400 Department cost $13,120 Determine the total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method. Cutting Department Cutting Department X Sewing Department X Sewing Department 6,400 $3,000 $66,000 11,600 $5,000 $85,000 ▼ Check My Work The reciprocal services method considers all inter-support-department service, and thus is the most accurate of the three support department allocation methods. The proportional usage of each support department's cost driver by the other departments to which its costs are to be allocated must be determined. Then, the support department costs are allocated simultaneously among the departments.
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