Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Sourcing Sourcing Operations 10,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Finishing Total Total Labor Hours Used by Departments Operations 20,000 Assembly 40,000 60,000 a Direct Method Assembly Finishing b. Step Method Assembly Finishing Reciprocal Method Departmental Costs $ 201,000 265,000 434,000 279,000 $1,170,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Total Service Department Cost Allocated Finishing 60,000 50,000 Total Production Cost
Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Sourcing Sourcing Operations 10,000 The costs incurred in the plant are as follows: Departments Sourcing Operations Assembly Finishing Total Total Labor Hours Used by Departments Operations 20,000 Assembly 40,000 60,000 a Direct Method Assembly Finishing b. Step Method Assembly Finishing Reciprocal Method Departmental Costs $ 201,000 265,000 434,000 279,000 $1,170,000 Required: 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? (For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.) Total Service Department Cost Allocated Finishing 60,000 50,000 Total Production Cost
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...
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Transcribed Image Text:Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing
(purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has
the following labor hours devoted by each of the service departments to the other departments.
Departments
Sourcing
Operations
Assembly
Finishing
Total
Total Labor Hours Used by Departments
Assembly
40,000
60,000
Sourcing
10,000
Sourcing
Operations
The costs incurred in the plant are as follows:
a Direct Method
Assembly
Finishing
b. Step Method
Operations
20,000
Assembly
Finishing
c Reciprocal Method
Departmental
Costs
$ 201,000
265,000
434,000
279,000
Required:
1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing
department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method?
2. What are the total costs in the production departments after allocation?
(For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)
Total Service
Department Cost
Allocated
Finishing
60,000
50,000
Total Production
Cost
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