(b)Allocate the support department costs using the step method to determine the total costs for which each operating departmentshould be accountable. Rank the support departments based on their original cost.Total$Operating DepartmentsWheelsWings$LATotal costs The Sunland Company makes wheels and wings for ground transport vehicles and drones. In addition to the key manufacturingdepartments, Sunland needs two key support services, provided by its Maintenance and IT departments.The Maintenance costs are allocated to other departments based on the square footage of space each department occupies. The ITdepartment allocates its costs to other departments based on the amount of time the IT employees spend assisting the otherdepartments. The cost information of all four departments, along with their usage information for both allocation bases, is as follows.Initial costSquare feet occupiedIT labor hours usedSupport DepartmentsMaintenanceIT$136,000 $75,0001,2002,000900Operating DepartmentsWheelsWings$413,000 $702,0002,4002,5655,6001,935Totals$1,326,00011,2005,400

Lets understand the basics.cost of service department can be allocated using,(1) Direct method(2)…

llocate the support department costs using the step method to determine the total costs for which each operating departm hould be accountable. Rank the support departments based on their original cost. Total $ Operating Departments Wheels $ Wings $ Total costs

llocate the support department costs using the step method to determine the total costs for which each operating departm hould be accountable. Rank the support departments based on their original cost. Total $ Operating Departments Wheels $ Wings $ Total costs

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 6E: Davis Snowflake Co. produces Christmas stockings in its Cutting and Sewing departments. The...

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A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The following data have been estimated for next years operations: The direct charges identified with each of the departments are as follows: The building maintenance department services all departments of the company, and its costs are allocated using floor space occupied, while factory office costs are allocable to Assembly and Machining on the basis of direct labor hours. 1. Distribute the service department costs, using the direct method. 2. Distribute the service department costs, using the sequential distribution method, with the department servicing the greatest number of other departments distributed first.
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