B-23.08 Problem

B-23.08 Problem - The clinic costs are to be allocated...

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B-23.08 costs are to be allocated based on employees and the janitorial costs are to be Downhill Manufacturing produces snow skis in a two-step production process - cutting and laminating. The manufacturing center is supported by two service centers - a health clinic and a janitorial service. The following table reveals certain facts about each activity: Health Clinic Janitorial Service Cutting Department Laminating Department Employees 2 4 10 15 Square footage 1,200 600 12,000 8,000 Cost incurred 180,000 $ 125,000 $ 700,000 $ 800,000 $ (a) Using the direct method, allocate the service department costs to production.
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Unformatted text preview: The clinic costs are to be allocated based on employees, and the janitorial costs are to be allocated based on the square footage. (b) Using the step method, allocate the service department costs to production. The clinic , allocated based on the square footage. The first step will be to allocate clinic costs. The clinic employees maintain their space and do not rely upon the janitorial service. However, janitorial employees occasionally sustain an injury and utilize the clinic....
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This note was uploaded on 02/29/2012 for the course ACCOUNTING 101 taught by Professor Hudack during the Spring '11 term at FIU.

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