7-35 Departmental Cost Allocation Logan Products has two production departmentsassembly and finishing. Page 259 These...
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7-35 Departmental Cost Allocation Logan Products has two production departmentsassembly and finishing. Page 259 These are supported by two service departmentssourcing (purchasing and handling of materials and human resources) and operations (work scheduling, supervision, and inspection). Logan has the following labor hours devoted by each of the service departments to the other departments. Total Labor Hours Used by Departments Sourcing Operations Assembly Finishing Sourcing 20.000 40,000 60,000 Operations 10.000 60,000 50,000 The costs incurred in the plant are as follows: Departments Departmental Costs Sourcing $165,000 Operations 205,000 Assembly 410,000 Finishing 255,000 Total $1,035,000 Required Use four decimal places (e.g., 33.3333%) in your calculation of percentages. 1. What are the costs allocated to the two production departments using (a) the direct method, (b) the step method, when the sourcing department that provides the greatest percentage of services to other service departments goes first), and (c) the reciprocal method? 2. What are the total costs in the production departments after allocation? [LO 7-3.7-4)
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