Ch07HWSolutionsPlus

Ch07HWSolutionsPlus - CHAPTER 7 ALLOCATING COSTS OF SUPPORT...

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CHAPTER 7 ALLOCATING COSTS OF SUPPORT DEPARTMENTS AND JOINT PRODUCTS EXERCISES 7–1 a. support f. support k. support b. producing g. support l. support c. support h. producing m. support d. producing i. producing n. support e. support j. producing o. support 7–2 a. support e. producing i. producing b. support f. support j. support c. producing g. support d. producing h. producing 7–3 a. Number of employees b. Square footage c. Pounds of laundry d. Orders processed e. Maintenance hours worked f. Number of employees g. Number of transactions processed h. Machine hours i. Square footage 1
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7–4 1. Single charging rate= ($3,000/1,000) + $1.50 = $4.50 per gift Number Charging Store of Gifts × Rate = Total The Paper Chase. ........................... 170 $4.50 $ 765 Reservation Art. ............................. 310 4.50 1,395 Kid-Sports. ...................................... 240 4.50 1,080 Sugar Shack. ................................... 10 4.50 45 Designer Shoes. ............................. 50 4.50 225 Boutique de Donatessa. ................ 200 4.50 900 Alan’s Drug and Sundries. ............ 450 4.50 2,025 Total. ......................................... 1,430 $6,435 2. Number Allocated Store of Gifts Percent Fixed Amount * The Paper Chase. ........................... 175 17.50 $ 525 Reservation Art. ............................. 400 40.00 1,200 Kid-Sports. ...................................... 100 10.00 300 Sugar Shack. ................................... 75 7.50 225 Designer Shoes. ............................. 20 2.00 60 Boutique de Donatessa. ................ 130 13.00 390 Alan’s Drug and Sundries. ............ 100 10 .00 300 Total. ......................................... 1,000 100 .00 $3,000 *Allocated fixed amount = Percent × $3,000. Variable rate = $1.50 per gift Number Variable Fixed Total Store of Gifts Amount + Amount = Charge The Paper Chase. ................. 170 $ 255 $ 525 $ 780 Reservation Art. .................... 310 465 1,200 1,665 Kid-Sports. ............................ 240 360 300 660 Sugar Shack. ......................... 10 15 225 240 Designer Shoes. .................... 50 75 60 135 Boutique de Donatessa. ...... 200 300 390 690 Alan’s Drug and Sundries. .. 450 675 300 975 Total. ............................... 1,430 $ 2,145 $ 3,000 $ 5,145 7–4 Concluded 2
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3. The shops that actually use the gift-wrapping service less than anticipated would like the single charging rate. The single charging rate assigns less of the fixed cost to the shops using less of the service. The Sugar Shack origin- ally anticipated having 75 gifts wrapped per month but actually had only 10 gifts wrapped. Under the single charging rate, The Sugar Shack pays $45; under the dual charging rate, it pays $240. The dual charging rate method is preferred by shops that use the service as
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This note was uploaded on 11/14/2009 for the course ACC 2338 taught by Professor Tba during the Fall '09 term at Randolph College.

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Ch07HWSolutionsPlus - CHAPTER 7 ALLOCATING COSTS OF SUPPORT...

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