Exam 21: Service Department Allocations

(Appendix 4B) Anchor Corporation has two service departments, Personnel and Engineering, and two operating departments. The costs of the Personnel Department are allocated to other departments on the basis of the number of employees in the departments. Departments and number of employees are as follows: Costs in the Personnel Department total $168,283 per year. -Suppose the company uses the step-down method and Personnel Department costs are allocated first.The amount of the Personnel Department cost allocated to the Engineering Department would be closest to:

(Appendix 4B) Strzelecki Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow: Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B. -The total Operating Department Y cost after allocations is closest to:

(Appendix 4B) Prestwich Corporation has two service departments and two operating departments. Costs of the Building and Grounds service department are allocated to other departments on the basis of square feet of space occupied. The departments in the company and the amount of space occupied by each are presented below: Budgeted costs in the Building and Grounds department total $34,800 for the year. -The amount of Building and Grounds department cost allocated to Operating Department A under the direct method would be:

[Fill in the blank.] Under the __________ method of allocating service department costs,services provided by service departments to other service departments are ignored and all service department costs are allocated directly to the operating departments.

(Appendix 4B) Yamane Corporation, a manufacturer, uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Administration and Facilities, and two operating departments, Assembly and Finishing. Data concerning those departments follow: Administration Department costs are allocated first on the basis of labor hours and Facilities Department costs are allocated second on the basis of space occupied. -The total Finishing Department cost after allocations is closest to:

(Appendix 4B) Anchor Corporation has two service departments, Personnel and Engineering, and two operating departments. The costs of the Personnel Department are allocated to other departments on the basis of the number of employees in the departments. Departments and number of employees are as follows: Costs in the Personnel Department total $168,283 per year. -Assuming that SJM allocates service department costs using the direct method,the total cost allocated from Maintenance to Processing would be closest to:

(Appendix 4B) Ockey Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Information Technology and Personnel, and two operating departments, Fabrication and Customization. Information Technology Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. -The total Fabrication Department cost after service department allocations is closest to:

(Appendix 4B) Muckenfuss Clinic uses the step-down method to allocate service department costs to operating departments. The clinic has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Medicine and Geriatric Medicine. Data concerning those departments follow: Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. -The total Geriatric Medicine Department cost after allocations is closest to:

Coakley Corporation uses the step-down method to allocate service department costs to operating departments.The company has two service departments,Administration and Facilities,and two operating departments,Assembly and Finishing. Administration Department costs are allocated first on the basis of employee time and Facilities Department costs are allocated second on the basis of space occupied. Required: Allocate the service department costs to the operating departments using the step-down method.

(Appendix 4B) Strzelecki Corporation uses the step-down method to allocate service department costs to operating departments. The company has two service departments, Service Department A and Service Department B, and two operating departments, Operating Department X and Operating Department Y. Data concerning those departments follow: Service Department A costs are allocated first on the basis of allocation base A and Service Department B costs are allocated second on the basis of allocation base B. -In the first step of the allocation,the amount of Service Department A cost allocated to the Operating Department X is closest to:

Alpha Manufacturing Corporation has two service departments,Custodial Services and Maintenance,and three production departments,Cutting,Milling,and Assembly.The company allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours.No distinction is made between variable and fixed costs.Budgeted operating data for the year just completed follow: Required: a.Prepare a schedule to allocate service department costs to the production departments by the direct method. b.Prepare a schedule to allocate service department costs to the production departments by the step-down method,allocating Custodial Services first.

(Appendix 4B) Blondell Legal Services, LLC, uses the step-down method to allocate service department costs to operating departments. The firm has two service departments, Personnel and Information Technology (IT), and two operating departments, Family Law and Corporate Law. Data concerning those departments follow: Personnel costs are allocated first on the basis of employees and IT costs are allocated second on the basis of PCs. -The total Corporate Law Department cost after allocations is closest to:

(Appendix 4B) Maute Clinic has two service departments, Administrative and Support, and two operating departments, Adult Medicine and Pediatrics. The clinic uses the direct method to allocate service department costs to operating departments. Administrative Department costs are allocated on the basis of employee hours and Support Department costs are allocated on the basis of space occupied in square feet. -The total Pediatrics Department cost after the allocations of service department costs is closest to:

(Appendix 4B) The James Corporation has four departments with data as follows: -Maintenance Department costs are allocated on the basis of labor hours.The amount of cost allocated to Milling from Maintenance under the direct method would be:

Parker Corporation has two service departments,Cafeteria and Engineering,and two operating departments.The number of employees in each department is given below: The costs of the Cafeteria are allocated to other departments on the basis of the number of employees in the departments.If these costs are budgeted at $69,375,the amount of Cafeteria cost allocated to Engineering under the direct method would be closest to:

(Appendix 4B) The Thomas Corporation has two service departments and two operating departments. The following data are available for a recent period: Thomas allocates service department costs by the step-down method in the following order: Administrative Department costs are allocated first, based on number of employees; Custodial Department costs are allocated second, based on square feet occupied. No distinction is made between fixed and variable costs. -After the allocations,the total amount of overhead cost contained in the Finishing Department will be:

Koehl Corporation uses the direct method to allocate service department costs to operating departments.The company has two service departments,Administrative and Facilities,and two operating departments,Assembly and Wholesaling. Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied.The total Wholesaling Department cost after the allocations of service department costs is closest to:

Catoire Consultancy uses the direct method to allocate its service department costs to its operating departments.The company has two service departments,Information Technology and Administration,and two operating departments,Corporate Practice and Government Practice.Data concerning those departments follow: Information Technology Department costs are allocated on the basis of computers and Administration Department costs are allocated on the basis of employees. Required: Allocate the service department costs to the operating departments using the direct method.

Dainels Corporation uses the step-down method to allocate service department costs to operating departments.The company has two service departments,General Management and Physical Plant,and two operating departments,Sales and After-Sales.Data concerning those departments follow: General Management Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied.The total After-Sales Department cost after allocations is closest to:

The step-down method of service department cost allocation ignores interdepartmental services provided from one service department to another service department and allocates all service department costs directly to operating departments.