Sep 19, 2017

QUESTION 1 INDIRECT COST ALLOCATION: DIRECT METHOD SPRINT MANUFACTURING COMPANY HAS TWO…

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Question 1

Indirect Cost Allocation: Direct Method
Sprint Manufacturing Company has two production departments, Melting and Molding. Direct general plant management and plant security costs benefit both production departments. Sprint allocates general plant management costs on the basis of the number of production employees and plant security costs on the basis of space occupied by the production departments. In November, the following overhead costs were recorded:

Melting Department direct overhead

$ 175,000

Molding Department direct overhead

300,000

General plant management

90,000

Plant security

35,000

Melting

Molding

Number of employees

25

45

Space occupied (square feet)

10,000

40,000

Machine hours

10,000

2,000

Direct labor hours

4,000

20,000

(a) Prepare a schedule allocating general plant management costs and plant security costs to the Melting and Molding Departments. (Round your answer to the nearest whole number. Do not round until your final answer.)

Department

Total

Melting

Molding

General Plant Management

$Answer

$Answer

$Answer

Plant security

$Answer

$Answer

$Answer

(b) Determine the total departmental overhead costs for the Melting and Molding Departments.
Melting $Answer
Molding $Answer
(c) Assuming the Melting Department uses machine hours and the Molding Department uses direct labor hours to apply overhead to production, calculate the overhead rate for each production department. (Round your answers to two decimal places.)
Melting $Answer
Molding $Answer

Question 2

Inventory Ratio Calculations
Delroi, Inc. provided the following data for 2013 and 2014:

Inventory
December 31, 2012

$ 202,400

December 31, 2013

190,400

December 31, 2014

182,500

Cost of goods sold
2013

$ 642,000

2014

724,000

Gross margin
2013

$ 340,000

2014

410,000

Round all calculations to two decimal places.
(a) Calculate the inventory turnover ratio for 2013 and 2014.
2013 Answer times
2014 Answer times
(b) Calculate the gross margin return on inventory investment for 2013 and 2014.
2013 Answer
2014 Answer

Question 3

Interdepartment Services: Step Method
O’Brian’s Department Stores allocates the costs of the Personnel and Payroll departments to three retail sales departments, Housewares, Clothing, and Furniture. In addition to providing services to the operating departments, Personnel and Payroll provide services to each other. O’Brian’s allocates Personnel Department costs on the basis of the number of employees and Payroll Department costs on the basis of gross payroll. Cost and allocation information for June is as follows:

Personnel

Payroll

Housewares

Clothing

Furniture

Direct department cost

$ 7,800

$ 3,200

$ 12,200

$ 20,000

$ 16,750

Number of employees

5

4

8

16

4

Gross payroll

$ 6,000

$ 3,300

$ 10,600

$ 17,400

$ 8,100

(a) Determine the percentage of total Personnel Department services that was provided to the Payroll Department. (Round your answer to one decimal place.)
Answer %
(b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department. (Round your answer one decimal place.)
Answer %
(c) Prepare a schedule showing Personnel Department and Payroll Department cost allocations to the operating departments, assuming O’Brian’s uses the step method.

For each department below, enter the total costs calculated from your schedule.

Do not round until your final answers. Round answers to the nearest dollar.

Service Departments


Producing Departments


Payroll

Personnel

Housewares

Clothing

Furniture

Total costs

$Answer

$Answer

$Answer

$Answer

$Answer


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