Chapter 15 (1)
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School
University of Alberta**We aren't endorsed by this school
Course
ACCTG 324
Subject
Industrial Engineering
Date
Jan 13, 2025
Pages
3
Uploaded by BrigadierPanther4792
Chapter 15 Example 1) Service Department Cost Allocation Hudson Community College enrols students in two departments, Liberal Arts and Sciences. The college also has two service departments, the Library and the Computing Services Department. The usage of these two service departments’output for the year is as follows: Provider of Service User of Service Library Computing Services Library 20% Computing Services Liberal Arts 60% 30% Sciences 40% 50% The budgeted costs in the two service departments for the year are as follows: Library $6,000,000 Computing Services 2,400,000 Required:1.Use the direct method to allocate the budgeted costs of the Library and Computing Services Department to the college’s Liberal Arts and Sciences departments. 2.Use the step method to allocate the budgeted costs of the Library and Computing Services Department to the college’s Liberal Arts and Sciences departments. 3.Use the reciprocal method to allocate the budgeted costs of the Library and Computing Services Department to the college’s Liberal Arts and Sciences departments.
Chapter 15 Example 2)Single Rate Method versus Dual Rate MethodPrecision Plastics maintains its own computer to service the needs of its two divisions. The company assigns the fixed costs of the computer center to the two divisions on the basis of the long-run average usage of CPU time. It also assigns the variable costs on the basis of the actual usage of CPU time. The following are the budgeted and the actual results of operations for 2024: Budget Fixed cost of operating the computer center $300,000 per year Practical capacity 1,500 hours Budgeted long-term usage (quantity) in hours Division A 400 Division B800 Total 1,200 Budgeted variable costs per hour in the 1,000- to 1,500-hour relevant range $200 per hour used Actual Usage Division A 200 hours Division B 800 hours Required: 1.Use the dual-cost method to allocate the costs of the computer center to the two divisions. 2.Suppose that Precision Plastics assigns the computer center’s costs to the two divisions on the basis of actual usage of CPU time. Determine the cost allocation. 3.Instead, suppose that the company calculates the allocation rate for fixed costs based on the computer center’s practical capacity. Use the dual-cost method to allocate the costs of the computer center to the two divisions.
Chapter 15 Example 3) Allocation of common cost Joan Ernst, a graduating senior at a university in Vancouver, received an invitation to visit a prospective employer in Halifax. A few days later, she received an invitation from a prospective employer in Toronto. She decided to combine her visits, travelling from Vancouver to Halifax, Halifax to Toronto, and Toronto to Vancouver. Ernst received job offers from both companies. Upon her return, she decided to accept the offer in Toronto. She was puzzled about how to allocate her travel costs between the two employers. She gathered the following data: Regular Round-Trip Fares with No Stopovers Vancouver to Halifax $1,400 Vancouver to Toronto $1,100 Ernest paid $1,800 for her three-leg flight (Vancouver to Halifax, Halifax to Toronto, and Toronto to Vancouver). REQUIRED: How should Ernst allocate the $1,800 airfare between the employers in Halifax and Toronto? Show the actual amounts you would allocate, and give reasons for your allocation.