Reference no: EM132674271
Logan Products has two production departments-assembly and finishing. These are supported by two service departments-sourcing (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 $219,000
Operations 295,000
Assembly 446,000
Finishing 291,000
Total $1,251,000
Required:
Use four decimal places (e.g., 33.3333%) in your calculation of percentages.
Problem 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?
Problem 2. What are the total costs in the production departments after allocation?
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