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Accounting problem




Question;Problem 1 ? Service Cost AllocationComputer Information Services is a computer software consulting company. Its threemajor functional areas are computer programming, information systems consulting, andsoftware training. Carol Birch, a pricing analyst in the Accounting Department, has beenasked to develop total costs for the functional areas. These costs will be used as aguide in pricing a new contract. In computing these costs, Birch is considering threedifferent methods of allocating overhead costs-the direct method, the step method, andthe reciprocal method. Birch assembled the following data on overhead from its twoservice departments, the Information Systems Department and the FacilitiesDepartment.Information systems is allocated on the basis of hours of computer usage, facilities areallocated on the basis of floor space.Required:1. Allocate the service department costs to the user departments using the directmethod. (Round to thenearest dollar and provide total user department costs)2. Allocate the service department costs to the user departments using the step method.AllocateInformation Systems first and round to the nearest dollar.Problem 2 ? Variance AnalysisThe XYZ Company uses a standard cost accounting system and estimates productionfor the year to be60,000 units. At this volume, the company's variable overhead costs are $0.50 per directlabor hour.The company's single product has a standard cost of $30.00 per unit. Included in the$30.00 is $13.20 for direct materials (3 yards) and $12.00 of direct labor (2 hours).Production information for the month of March follows:Required: (Be sure to indicate whether the variances are favorable or unfavorable.)a. Compute the direct material price variance.b. Compute the direct material efficiencyvariance. c. Compute the direct laborprice (rate) variance.d. Compute the direct labor efficiency variance


Paper#50947 | Written in 18-Jul-2015

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