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Exam 20: Service Department Allocations

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Question 31

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Ponce 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:

A) $515,170
B) $510,933
C) $504,110
D) $515,379

E) A) and C)
F) A) and B)

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Question 32

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Enzor Surgical Hospital uses the direct method to allocate service department costs to operating departments. The hospital has two service departments, Information Technology and Administration, and two operating departments, Surgery and Recovery. Information Technology Department costs are allocated on the basis of computer workstations and Administration Department costs are allocated on the basis of employees. -The total Surgery Department cost after service department allocations is closest to:

A) $500,818
B) $498,775
C) $494,416
D) $503,713

E) A) and B)
F) C) and D)

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Question 33

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Flinders Company has two service departments,Factory Administration and Maintenance,and two operating departments.Selected information relating to these departments is given below: The company allocates service department costs by the step-down method.Factory Administration costs are allocated first on the basis of number of employees,and then Maintenance costs are allocated on the basis of total labor hours. Required: Prepare a schedule showing the allocation of service department costs to other departments.

The Uinta Company has two service departments and two operating departments. The following data are available from last year: The costs of service departments 1 and 2 are allocated on the basis of number of transactions and square feet occupied respectively. No distinction is made between fixed and variable costs. -Assuming that Uinta allocates service department costs by the direct method,the total overhead costs allocated from Department 1 to Department X are:

Bankert 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:

Sobczynski 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.