Response to the following:
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.)
(b) Determine the total departmental overhead costs for the Melting and Molding Departments.
(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.)
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.
(b) Calculate the gross margin return on inventory investment for 2013 and 2014.
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.)
(b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department. (Round your answer one decimal place.)
(c) Prepare a schedule showing Personnel Department and Payroll Department cost allocations to the operating departments, assuming O'Brian's uses the step method.