Williams manufactures a variety of iron products, made to customer specification

Question

Williams manufactures a variety of iron products, made to customer specifications, in small batches. Willie Williams, owner, is concerned that he does not have an accurate understanding of the costs of production. You, a newly-minted MBA, have researched his business and identified various costs and cost drivers. Assembl Total Janitorial Welding HR Data Sves y Own costs Square feet # employees # transactions (thou) Power usage S 10,000 S 82,000 $41,200 S 36,400 S 58,000 $ 227,600 400 2,000 500 2,500 3,500 8,900 130 1,070 216 1,010 26 105 735 182 16 76 142 603 38 21 al, HR, and Data Services) are allocated to the two production departments The service departments (Canitori (Welding and Assembly). Janitorial costs are allocated using # of employees HR using # of transactions, and Data Services using square feet. You recall department costs, direct, step-down and reciprocal methods. that there are several approaches to the allocation of service a. b. c. If the direct method is used, how much of the Data Svcs is allocated to Welding and Assembly? If the direct method is used, how much of the Janitorial is allocated to Welding and Assembly? If the direct method is used, how much of the HR is allocated to Welding and Assembly?

Explanation / Answer

Answer a Allocation of Data Services department cost to Welding and Assembly using direct method Data service department cost allocated to Welding = [$36400*2000 Sq.ft/5500 Sq.ft.] = $12,236 Data service department cost allocated to Assembly = [$36400*3500 Sq.ft/5500 Sq.ft.] = $23,164 Answer b Allocation of Janitorial department cost to Welding and Assembly using direct method Janitorial department cost allocated to Welding = [$10000*26 employees/102 employees] = $2,549 Janitorial department cost allocated to Assembly = [$10000*76 employees/102 employees] = $7,451 Answer c Allocation of HR department cost to Welding and Assembly using direct method HR department cost allocated to Welding = [$41200*105 transactions /247 transactions] = $17,514 HR department cost allocated to Assembly = [$41200*142 transactions /247 transactions] = $23,686

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.