Answer the following questions using the information below: Jake\'s Battery Comp
ID: 2458816 • Letter: A
Question
Answer the following questions using the information below:
Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $420,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $90,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
Support departm
production department
maintenance department
Budgeted maintenance hours
1. Using the direct method, what amount of Maintenance Department and Personnel Department costs will be allocated to Department A & B?
a. $96000 & $64000; $20000 & $50000
b. $252000 & $168000 ; $22500 & $67500
c $156000 & $132000 ; $30000 & $70000
d None of these
2. Using the step-down method, what amount of Maintenance Department cost will be allocated to Department A and department B
a. $64000 and $130000
b. $168000 and $111972
c. $114667 and $76092
d. none of these
3. Using the step-down method what amount of Peronnel Department cost will be allocated to Department A And Department B
a. $57507 and $172500
b. $85333 and $139992
c. $114667 and $57890
d. None of these
Support departm
production department
Explanation / Answer
Answers:
1) Option b - $252000 & $168000; $22500 & $67500
2) Option d - None of these. It should be $168000 & $112000
3) Option d - None of these. It should be $57500 & $172500
The step -down method would yield results as under:
STEP DOWN METHOD Mechanical Personnel Dept A Dept B Dept Dept Costs prior to allocation 420000 90000 Maintenance Department costs -420000 140000 168000 112000 Personnel Department costs -230000 57500 172500 0 0 225500 284500Related Questions
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