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Allocating Costs Using Direct and Step-Down Methods

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12-59 Allocating Costs Using Direct and Step-Down Methods;Goal: Create an Excel spreadsheet to allocate costs using the direct method and the stepdown;method. Use the results to answer questions about your findings.;Scenario: Antonio Cleaning has asked you to help them determine the best method for;allocating costs from their service departments to their producing departments. Additional;background information for your spreadsheet appears in Fundamental Assignment Material;12-B2. Exhibit 12-4 on page 532 illustrates the types of calculations that are used for;allocating costs using the direct method and the step-down method.;When you have completed your spreadsheet, answer the following questions;1. What are the total costs for the Residential department using the direct method?;What are the total costs for the Commercial department using the direct method?;2. What are the total costs for the Residential department using the step-down method?;3. What are the total costs for the Commercial department using the step-down method?;4. Which method would you recommend that Antonio Cleaning use to allocate their;service departments' costs to their producing departments? Why?;Step-by-Step;1. Open a new Excel spreadsheet.;2. In column A, create a bold-faced heading that contains the following;Row 1: Chapter 12 Decision Guideline;Row 2: Dallas Cleaning;Row 3: Cost Allocations from Service Departments to Producing Departments;Row 4: Today's Date;3. Merge and center the four heading rows across columns A through H.;4. In row 7, create the following bold-faced, center-justified column headings;Column B: Personnel;Column C: Administrative;Column D: Residential;Column E: Commercial;Column F: Total Res/Comm;Column G: Total Admin/Res/Comm;Column H: Grand Total;5. Change the format of the column headings in row 7 to permit the titles to be displayed;on multiple lines within a single cell.;Alignment tab: Wrap Text: Checked;Note: Adjust column widths so that headings use only two lines.;Adjust row height to ensure that row is same height as adjusted headings.;6. In column A, create the following row headings;Row 8: Direct Department Costs;Row 9: Number of Employees;Skip 2 rows;Note: Adjust the width of column A to 27.14.;7. In column A, create the following bold-faced, underlined row heading;Row 12: Direct Method;8. In column A, create the following row headings;Row 13: Direct Department Costs;Row 14: Personnel Allocation;Row 15: Administrative Allocation;Row 16: Total Costs;Skip 2 rows;9. In column A, create the following bold-faced, underlined row heading;Row 19: Step-down Method;10. In column A, create the following row headings;Row 20: Direct Department Costs;Row 21: Step 1-Personnel Allocation;Row 22: Step 2-Administrative Allocation;Row 23: Total Costs;11. Use data from Fundamental Assignment 12-B2 to enter the amounts in columns B;through E for rows 8, 9, 13, and 20.;12. Use the appropriate calculations to do the totals in row 8 for columns F and H.;Use the appropriate calculations to do the totals in row 9 for columns F and G.;13. Use the appropriate formulas to allocate the costs from the service departments to the;producing departments using each of the methods.;14. Use the appropriate calculations to do the totals in columns B through E and in column H;rows 16 and 23.;ISBN: 0-536-47129-0;Introduction to Management Accounting: Chapters 1-17, Fourteenth Edition, by Charles T. Horngren, Gary L. Sundem, William O. Stratton;David Burgstahler, and Jeff Schatzberg. Published by Prentice Hall. Copyright ? 2008 by Pearson Education, Inc.;586 Part 4: Product Costing;15. Format amounts in columns B through H, rows 8, 13, 16, 20, and 23 as;Number tab: Category: Accounting;Decimal: 0;Symbol: $;16. Format the amount in columns B through E, rows 14, 15, 21, and 22 as;Number tab: Category: Accounting;Decimal: 0;Symbol: None;17. Change the format of the total costs amounts in columns B through E, rows 16 and 23;to display a top border, using the default line style.;Border tab: Icon: Top Border;18. Change the format of the amounts in row 9, columns B through G to center justified.;19. Save your work to disk, and print a copy for your files.;Note: Print your spreadsheet using landscape in order to ensure that all columns appear on one page..;13-B3 Comparison of Variable Costing and Absorption Costing;Consider the following information pertaining to a year's operations of Youngstown Manufacturing;Units sold 1,400;Units produced 1,600;Direct labor $4,200;Direct materials used 3,500;Fixed manufacturing overhead 2,200;Variable manufacturing overhead 300;Selling and administrative expenses (all fixed) 700;Beginning inventories 0;Contribution margin 5,600;Direct-material inventory, end 800;There are no work-in-process inventories.;1. What is the ending finished-goods inventory cost under absorption costing?;2. What is the ending finished-goods inventory cost under variable costing?;13-45 Variable and Absorption Costing;Chan Manufacturing Company data for 20X7 follow;Sales: 12,000 units at $17 each;Actual production 15,000 units;Expected volume of production 18,000 units;Manufacturing costs incurred;Variable $120,000;Fixed 63,000;Nonmanufacturing costs incurred;Variable $ 24,000;Fixed 18,000;1. Determine operating income for 20X7, assuming the firm uses the variable-costing approach to;product costing. (Do not prepare a statement.);2. Assume that there is no January 1, 20X7, inventory, no variances are allocated to inventory, and;the firm uses a "full absorption" approach to product costing. Compute (a) the cost assigned to;December 31, 20X7, inventory, and (b) operating income for the year ended December 31, 20X7.;(Do not prepare a statement.);13-48 Overhead Variances;Study Appendix 13. Consider the following data for the Rivera Company;Factory Overhead;Fixed Variable;Actual incurred $14,200 $13,300;Budget for standard hours allowed;for output achieved 12,500 11,000;Applied 11,600 11,000;Budget for actual hours of input 12,500 11,400;From the above information, fill in the blanks below. Be sure to mark your variances F for favorable;and U for unfavorable.;a. Flexible-budget variance $______ Fixed $;Variable $;b. Production-volume variance $______ Fixed $;Variable $;c. Spending variance $______ Fixed $;Variable $;d. Efficiency variance $______ Fixed $;Variable $;13-49 Variances;Study Appendix 13. Consider the following data regarding factory overhead;Variable Fixed;Budget for actual hours of input $45,000 $70,000;Applied 41,000 64,800;Budget for standard hours allowed;for actual output achieved??;Actual incurred 48,500 68,500;Using the above data, fill in the following blanks with the variance amounts. Use F for favorable or U;for unfavorable for each variance.;Total Overhead Variable Fixed;1. Spending variance;2. Efficiency variance;3. Production-volume variance;4. Flexible-budget variance;5. Underapplied overhead

 

Paper#26345 | Written in 18-Jul-2015

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