50.1K

Verified Solution

Link Copied!

1-Direct method combined with dual allocation.

a. Variable costs

b. Fixed costs

c. Total costs allocated

---------

2. Step-down method combined with dual allocation.

a. Variable costs

b. Fixed costs

c. Total costs allocated

[The following information applies to the questions displayed below Tampa Instrument Company manufactures gauges for construction machinery. The company has two production departments: Machining and Assembly. There are three service departments Maintenance, Human Resources (HR), and Computer Aided Design (CAD). The usage of these service departments' output during the year just completed is as follows: Provision of Service Output (in hours of service) Provider of Service Maintenance User of Service HR Maintenance CAD Machining Assembly Total HR 1,000 1,000 2,000 4,000 8,000 1,000 2,500 3,500 7000 5,000 3,000 8,000 The budgeted costs in Tampa Instrument Company's service departments during the year are as follows: Variable Fixed Total HR $ 52,000 220,000 $272,000 Maintenance $88,000 252,500 $340,500 CAD $52,000 340,000 $392,000 When Tampa Instrument Company established its service departments, the following long-run needs were anticipated Long-Run Service Needs (in hours of service Provider of Service Maintenance User of Service HR CAD HR Maintenance CAD Machining Assembly Total 1,000 500 2,500 4,000 8,000 400 4,400 2,200 7,000 4,800 3,200 8,000 Requirecd Use dual cost allocation in conjunction with each of the following methods to allocate Tampa Instrument Company's service department costs:(1 direct method and (2) step-down method

Answer & Explanation Solved by verified expert

See Answer