Chapter Title - California State University, Sacramento

Chapter Title - California State University, Sacramento

Systems Design: Process Costing Similarities Between Job-Order and Process Costing Both systems assign material, labor and overhead costs to products and they provide a mechanism for computing unit product costs. Both systems use the same manufacturing accounts, including Manufacturing Overhead, Raw Materials, Work in Process, and Finished Goods. The flow of costs through the manufacturing accounts is basically the same in both systems. Differences Between Job-Order and Process Costing

Process costing is used when a single product is produced on a continuing basis or for a long period of time. Job-order costing is used when many different jobs having different production requirements are worked on each period. Process costing systems accumulate costs by department. Job-order costing systems accumulated costs by individual jobs. Process costing systems compute unit costs by department. Job-order costing systems compute unit costs by job on the job cost sheet. Quick Check Process costing is used for products that are: a. Different and produced continuously.

b. Similar and produced continuously. c. Individual units produced to customer specifications. d. Purchased from vendors. Quick Check Process costing is used for products that are: a. Different and produced continuously. b. Similar and produced continuously. c. Individual units produced to customer specifications. d. Purchased from vendors. Processing Departments Any unit in an organization where materials, labor or overhead are added to the product. The activities performed in a processing department are performed uniformly on all

units of production. Furthermore, the output of a processing department must be homogeneous. Products in a process costing environment typically flow in a sequence from one department to another. Learning Objective 1 Record the flow of materials, labor, and overhead through a process costing system. Comparing Job-Order and Process Costing Direct Materials Direct Labor Manufacturing

Overhead Work in Process Finished Goods Cost of Goods Sold Comparing Job-Order and Process Costing Costs are traced and applied to individual jobs in a job-order cost system. Direct

Materials Direct Labor Manufacturing Overhead Jobs Jobs Finished Goods Cost of Goods Sold Comparing Job-Order and Process Costing Direct Materials

Direct Labor Manufacturing Overhead Costs are traced and applied to departments in a process cost system. Processing Department Finished Goods Cost of Goods

Sold T-Account and Journal Entry Views of Process Cost Flows For purposes of this example, assume there are two processing departments Departments A and B. We will use T-accounts and journal entries. Process Cost Flows: The Flow of Raw Materials (in T-account form) Raw Materials Direct Materials Work in Process

Department A Direct Materials Work in Process Department B Direct Materials Process Cost Flows: The Flow of Raw Materials (in journal entry form) GENERAL JOURNAL Date Description Post. Ref.

Page 4 Debit Work in Process - Department A XXXXX Work in Process - Department B XXXXX Raw Materials To record the use of direct material. Credit XXXXX Process Cost Flows: The Flow of Labor

Costs (in T-account form) Salaries and Wages Payable Direct Labor Work in Process Department A Direct Materials Direct Labor Work in Process Department B Direct Materials Direct Labor

Process Costing: The Flow of Labor Costs (in journal entry form) GENERAL JOURNAL Date Description Post. Ref. Page 4 Debit Work in Process - Department A XXXXX Work in Process - Department B

XXXXX Salaries and Wages Payable To record direct labor costs. Credit XXXXX Process Cost Flows: The Flow of Manufacturing Overhead Costs (in T-account form) Work in Process Department A Manufacturing Overhead Actual Overhead

Overhead Applied to Work in Process Direct Materials Direct Labor Applied Overhead Work in Process Department B Direct Materials Direct Labor Applied

Overhead Process Cost Flows: The Flow of Manufacturing Overhead Costs (in journal entry form) GENERAL JOURNAL Date Description Post. Ref. Page 4 Debit Work in Process - Department A XXXXX

Work in Process - Department B XXXXX Manufacturing Overhead To apply overhead to departments. Credit XXXXX Process Cost Flows: Transfers from WIP-Dept. A to WIP-Dept. B (in T-account form) Work in Process Department A Direct Transferred Materials to Dept. B

Direct Labor Applied Overhead Department Department A A Work in Process Department B Direct Materials Direct Labor Applied Overhead Transferred

from Dept. A Department Department B B Process Cost Flows: Transfers from WIP-Dept. A to WIP-Dept. B (in journal entry form) GENERAL JOURNAL Date Description Work in Process - Department B Work in Process - Department A To record the transfer of goods from Department A to Department B. Post.

Ref. Page 4 Debit Credit XXXXX XXXXX Process Cost Flows: Transfers from WIP-Dept. B to Finished Goods (in T-account form) Work in Process Department B Direct Cost of Materials Goods Direct

Manufactured Labor Applied Overhead Transferred from Dept. A Finished Goods Cost of Goods Manufactured Process Cost Flows: Transfers from WIP-Dept. B to Finished Goods (in journal entry form) GENERAL JOURNAL Date Description Finished Goods

Work in Process - Department B To record the completion of goods and their transfer from Department B to finished goods inventory. Post. Ref. Page 4 Debit Credit XXXXX XXXXX Process Cost Flows: Transfers from Finished Goods to COGS (in T-account form) Work in Process

Department B Finished Goods Direct Cost of Cost of Cost of Materials Goods Goods Goods Direct Manufactured Manufactured Sold Labor Applied Overhead

Transferred Cost of Goods Sold from Dept. A Cost of Goods Sold Process Cost Flows: Transfers from Finished Goods to COGS (in journal entry form) GENERAL JOURNAL Date Description Cost of Goods Sold Finished Goods To record the transfer of finished goods inventory to cost of goods sold.

Post. Ref. Page 4 Debit Credit XXXXX XXXXX Equivalent Units of Production Equivalent units are the product of the number of partially completed units and the percentage completion of those units. We need to calculate equivalent units because a department usually has some partially completed units in its beginning and ending inventory. These partially

completed units complicate the determination of a departments output for a given period and the unit cost that should be assigned to that output. Equivalent Units The Basic Idea Two half completed products are equivalent to one complete product. + = 1 So, So, 10,000 10,000 units units 70% 70% complete

complete are are equivalent equivalent to to 7,000 7,000 complete complete units. units. Quick Check For the current period, Jones started 15,000 units and completed 10,000 units, leaving 5,000 units in process 30 percent complete. How many equivalent units of production did Jones have for the period? a. 10,000 b. 11,500 c. 13,500 d. 15,000

Quick Check For the current period, Jones started 15,000 units and completed 10,000 units, leaving 5,000 units in process 30 percent complete. How many equivalent units of production did Jones have for the period? a. 10,000 10,000 units + (5,000 units 0.30) b. 11,500 = 11,500 equivalent units c. 13,500 d. 15,000 Calculating Equivalent Units Equivalent Equivalent units units can

can be be calculated calculated two two ways: ways: The FIFO is is The First-In, First-In, First-Out First-Out Method Method FIFO covered covered in in the the appendix appendix to to this

this chapter. chapter. The This method method The Weighted-Average Weighted-Average Method Method This will will be be covered covered in in the the main main portion portion of of the the chapter.

chapter. Learning Objective 2 Compute the equivalent units of production using the weighted-average method. Equivalent Units of Production Weighted-Average Method The weighted-average method . . . 1. Makes no distinction between work done in prior or current periods. 2. Blends together units and costs from prior and current periods. 3. Determines equivalent units of production for a department by adding together the number of

units transferred out plus the equivalent units in ending Work in Process Inventory. Treatment of Direct Labor Dollar Amount Direct Materials Manufacturing Overhead Direct Labor Type of Product Cost Direct labor costs may be small in comparison to other product

costs in process cost systems. Treatment of Direct Labor Dollar Amount Direct Materials Conversion Direct Labor Direct Labor Type of Product Cost Manufacturing Overhead

Direct labor and manufacturing overhead may be combined into one classification of product cost called conversion costs. Weighted-Average An Example Smith Company reported the following activity in the Assembly Department for the month of June: Percent Completed Units Work in process, June 1 300

Units started into production in June 6,000 Units completed and transferred out of Department A during June 5,400 Work in process, June 30 900 Materials Conversion 40% 20% 60%

30% Weighted-Average An Example The first step in calculating the equivalent units is to identify the units completed and transferred out of Assembly Department in June (5,400 units) Materials Units completed and transferred out of the Department in June 5,400 Conversion 5,400 Weighted-Average An Example The second step is to identify the equivalent units of production in ending work in process with respect to materials for the

month (540 units) and adding this to the 5,400 units from step one. Materials Units completed and transferred out of the Department in June 5,400 Work in process, June 30: 900 units 60% Equivalent units of Production in the Department during June 540 5,940 Conversion 5,400

Weighted-Average An Example The third step is to identify the equivalent units of production in ending work in process with respect to conversion for the month (270 units) and adding this to the 5,400 units from step one. Materials Units completed and transferred out of the Department in June 5,400 Conversion 5,400 Work in process, June 30: 900 units 60% 540

900 units 30% Equivalent units of Production in the Department during June 270 5,940 5,670 Weighted-Average An Example Equivalent units of production always equals: Units completed and transferred + Equivalent units remaining in work in process Materials Units completed and transferred out of the Department in June 5,400

Conversion 5,400 Work in process, June 30: 900 units 60% 540 900 units 30% Equivalent units of Production in the Department during June 270 5,940 5,670 Weighted-Average An Example

Materials Beginning Work in Process 300 Units 40% Complete 6,000 Units Started 5,100 Units Started and Completed 5,400 Units Completed 540 Equivalent Units 5,940 Equivalent units of production Ending Work in Process 900 Units

60% Complete 900 60% Weighted-Average An Example Conversion Beginning Work in Process 300 Units 20% Complete 6,000 Units Started 5,100 Units Started and Completed 5,400 Units Completed 270 Equivalent Units

5,670 Equivalent units of production Ending Work in Process 900 Units 30% Complete 900 30% Learning Objective 3 Compute the cost per equivalent unit using the weighted-average method. Compute and Apply Costs Beginning Work in Process Inventory: 400 units

Materials: 40% complete $ 6,119 Conversion: 20% complete $ 3,920 Production started during June 6,000 units Production completed during June 5,400 units Costs added to production in June Materials cost $ 118,621 Conversion cost $ 81,130 Ending Work in Process Inventory: Materials: 60% complete Conversion: 30% complete

900 units Compute and Apply Costs The formula for computing the cost per equivalent unit is: Cost per equivalent = unit Cost of beginning Work in Process + Cost added during the period Inventory Equivalent units of production Compute and Apply Costs Here is a schedule with the cost and equivalent

unit information. Total Cost Cost to be accounted for: Work in process, June 1 Cost added in Assembly Total cost Equivalent units Materials Conversion $ 10,039 199,751 $

6,119 118,621 $ 3,920 81,130 $ 209,790 $ 124,740 $ 85,050

5,940 5,670 Compute and Apply Costs Here is a schedule with the cost and equivalent unit information. $124,740 5,940 units = $21.00 $85,050 5,670 units = $15.00 Total Cost Cost to be accounted for: Work in process, June 1 Cost added in Assembly Total cost Materials

Conversion $ 10,039 199,751 $ 6,119 118,621 $ 3,920 81,130 $

209,790 $ 124,740 $ 85,050 Equivalent units Cost per equivalent unit 5,940 $ 21.00 5,670 $

15.00 Cost per equivalent unit = $21.00 + $15.00 = $36.00 Learning Objective 4 Assign costs to units using the weighted-average method. Applying Costs Assembly Department Cost of Ending WIP Inventory and Units Transferred Out Materials Conversion Total Ending WIP inventory: Equivalent units 540

270 Applying Costs Assembly Department Cost of Ending WIP Inventory and Units Transferred Out Materials Conversion Total Ending WIP inventory: Equivalent units 540 270 Cost per equivalent unit $ 21.00 $ 15.00 Applying Costs Assembly Department

Cost of Ending WIP Inventory and Units Transferred Out Materials Conversion Total Ending WIP inventory: Equivalent units 540 270 Cost per equivalent unit $ 21.00 $ 15.00 Cost of Ending WIP inventory $ 11,340 $ 4,050 $ 15,390 Computing the Cost of Units Transferred Out

Assembly Department Cost of Ending WIP Inventory and Units Transferred Out Materials Conversion Total Ending WIP inventory: Equivalent units 540 270 Cost per equivalent unit $ 21.00 $ 15.00 Cost of Ending WIP inventory $ 11,340 $ 4,050 $ 15,390 Units completed and transferred out:

Units transferred 5,400 5,400 Computing the Cost of Units Transferred Out Assembly Department Cost of Ending WIP Inventory and Units Transferred Out Materials Conversion Total Ending WIP inventory: Equivalent units 540 270 Cost per equivalent unit $ 21.00 $ 15.00 Cost of Ending WIP inventory

$ 11,340 $ 4,050 $ 15,390 Units completed and transferred out: Units transferred 5,400 5,400 Cost per equivalent unit $ 21.00 $ 15.00 Computing the Cost of Units Transferred Out Assembly Department Cost of Ending WIP Inventory and Units Transferred Out Materials Conversion Total

Ending WIP inventory: Equivalent units 540 270 Cost per equivalent unit $ 21.00 $ 15.00 Cost of Ending WIP inventory $ 11,340 $ 4,050 $ 15,390 Units completed and transferred out: Units transferred 5,400 5,400 Cost per equivalent unit

$ 21.00 $ 15.00 Cost of units transferred out $ 113,400 $ 81,000 $ 194,400 Learning Objective 5 Prepare a cost reconciliation report. Reconciling Costs Assembly Department Cost Reconciliation Costs to be accounted for: Cost of beginning Work in Process Inventory

Costs added to production during the period Total cost to be accounted for $ $ 10,039 199,751 209,790 Reconciling Costs Assembly Department Cost Reconciliation Costs to be accounted for: Cost of beginning Work in Process Inventory Costs added to production during the period Total cost to be accounted for Cost accounted for as follows: Cost of ending Work in Process Inventory

Cost of units transferred out Total cost accounted for $ $ $ $ 10,039 199,751 209,790 15,390 194,400 209,790 Operation Costing Operation cost is a hybrid of job-order and

process costing because it possesses attributes of both approaches Operation Operation costing costing is is commonly commonly used used when when batches batches of of many many different different products products pass pass through through the

the same same processing processing department. department. FIFO Method Appendix 4A FIFO vs. Weighted-Average Method The FIFO method (generally considered more accurate than the weighted-average method) differs from the weighted-average method in two ways: 1. 1. The The computation computation of

of equivalent equivalent units. units. 2. 2. The The way way in in which which the the costs costs of of beginning beginning inventory inventory are are treated. treated. Learning Objective 6

Compute the equivalent units of production using the FIFO method. Equivalent Units FIFO Method Lets revisit the Smith Company example. Here is information concerning the Assembly Department for the month of June. Percent Completed Units Work in process, June 1 300 Units started into production in June 6,000

Units completed and transferred out of Department A during June 5,400 Work in process, June 30 900 Materials Conversion 40% 20% 60% 30% Equivalent Units FIFO Method

Step 1: 1 Determine equivalent units needed to complete beginning Work in Process Inventory. Materials To complete beginning Work in Process: Materials: 300 units (100% - 40%) Conversion: 300 units (100% - 20%) Conversion 180 240 Equivalent Units FIFO Method Step 2: 2 Determine units started and completed during the period. Materials To complete beginning Work in Process:

Materials: 300 units (100% - 40%) 180 Conversion: 300 units (100% - 20%) Units started and completed during June Conversion 240 5,100 5,100 Equivalent Units FIFO Method Step 3: 3 Add the equivalent units in ending Work in Process Inventory. Materials

To complete beginning Work in Process: Materials: 300 units (100% - 40%) 180 Conversion: 300 units (100% - 20%) Units started and completed during June Conversion 240 5,100 5,100 Ending Work in Process Materials: 900 units 60% complete Conversion: 900 units 30% complete Equivalent units of production

540 270 5,820 5,610 FIFO Example Materials Beginning Work in Process 300 Units 40% Complete 300 60% 6,000 Units Started

5,100 Units Started and Completed 180 Equivalent Units 5,100 Units Completed 540 Equivalent Units 5,820 Equivalent units of production Ending Work in Process 900 Units 60% Complete 900 60% FIFO Example Conversion

Beginning Work in Process 300 Units 20% Complete 300 80% 6,000 Units Started 5,100 Units Started and Completed 240 Equivalent Units 5,100 Units Completed 270 Equivalent Units 5,610 Equivalent units of production Ending

Work in Process 900 Units 30% Complete 900 30% Equivalent Units: Weighted-Average vs. FIFO As shown below, the equivalent units in beginning inventory are subtracted from the equivalent units of production per the weighted-average method to obtain the equivalent units of production under the FIFO method. Equivalent units - weighted-average method Less equivalent units in beginning inventory: 300 units 40% 300 units 20% Equivalent units - FIFO method Materials

5,940 Conversion 5,670 120 5,820 60 5,610 Learning Objective 7 Compute the cost per equivalent unit using the FIFO method. Cost per Equivalent Unit - FIFO Lets revisit the Smith Company Assembly Department

for the month of June to prepare our production report. Beginning work in process: Materials: 40% complete Conversion: 20% complete 400 units $ $ 6,119 3,920 Production started during June Production completed during June 6,000 units 5,400 units Costs added to production in June

Materials cost Conversion cost $ 118,621 $ 81,130 Ending work in process Materials: 60% complete Conversion: 30% complete 900 units Cost per Equivalent Unit - FIFO The formula for computing the cost per equivalent unit under FIFO method is: Cost per Equivalent Unit - FIFO Total

Cost Cost added in June Equivalent units $ 199,751 Cost per equivalent unit $118,600 5,820 Materials Conversion $ 118,621 5,820 $

$ 20.3816 $ 14.4617 81,130 5,610 $81,130 5,610 Total cost per equivalent unit = $20.3816 + $14.4617 = $34.8433 $34.8433 Learning Objective 8 Assign costs to units using the FIFO method. Applying Costs - FIFO Step 1:

1 Record the equivalent units of production in ending Work in Process Inventory. Assembly Department Cost of Ending WIP Inventory Materials Conversion Ending WIP inventory: Equivalent units 540 900 900 units units 60% 60% 270 900 900 units

units 30% 30% Total Applying Costs - FIFO Step 2: 2 Record the cost per equivalent unit. Assembly Department Cost of Ending WIP Inventory Materials Conversion Ending WIP inventory: Equivalent units Cost per equivalent unit 540 $ 20.3816 270

$ 14.4617 Total Applying Costs - FIFO Step 3: 3 Compute the cost of ending Work in Process Inventory. Assembly Department Cost of Ending WIP Inventory Materials Conversion Ending WIP inventory: Equivalent units Cost per equivalent unit Cost of Ending WIP inventory 540 $ 20.3816 $ 11,006

540 540 $20.3816 $20.3816 270 $ 14.4617 $ 3,905 270 270 14.4617 14.4617 Total $ 14,911

Cost of Units Transferred Out Step 1: 1 Record the cost in beginning Work in Process Inventory. Assembly Department Cost of Units Transferred Out in June Materials Conversion Cost of Units Transferred Out: Cost in beginning WIP inventory $ 6,119 $ 3,920 Total $ 10,039 Cost of Units Transferred Out

Step 2: 2 Compute the cost to complete the units in beginning Work in Process Inventory. Assembly Department Cost of Units Transferred Out in June Materials Conversion Cost of Units Transferred Out: Cost in beginning WIP inventory $ 6,119 $ 3,920 Cost to complete beginning WIP Equivalent units to complete 180 240 Cost per equivalent unit $ 20.3816 $ 14.4617

Cost to complete beginning WIP $ 3,668 $ 3,471 Total $ 10,039 7,139 Cost of Units Transferred Out Step 3: 3 Compute the cost of units started and completed this period. Assembly Department Cost of Units Transferred Out in June

Materials Conversion Cost of Units Transferred Out: Cost in beginning WIP inventory $ 6,119 $ 3,920 Cost to complete beginning WIP Equivalent units to complete 180 240 Cost per equivalent unit $ 20.3816 $ 14.4617 Cost to complete beginning WIP $ 3,668 $ 3,471

Cost of units started and completed: Units started and completed 5,100 5,100 Cost per equivalent unit $ 20.3816 $ 14.4617 Cost of units started and completed $ 103,946 $ 73,755 Total $ 10,039 7,139 177,701

Cost of Units Transferred Out Step 4: 4 Compute the total cost of units transferred out. Assembly Department Cost of Units Transferred Out in June Materials Conversion Cost of Units Transferred Out: Cost in beginning WIP inventory $ 6,119 $ 3,920 Cost to complete beginning WIP Equivalent units to complete 180 240 Cost per equivalent unit $ 20.3816

$ 14.4617 Cost to complete beginning WIP $ 3,668 $ 3,471 Cost of units started and completed: Units started and completed 5,100 5,100 Cost per equivalent unit $ 20.3816 $ 14.4617 Cost of units started and completed $ 103,946 $ 73,755 Cost of Units Transferred Out Total

$ 10,039 7,139 177,701 $ 194,879 Learning Objective 9 Prepare a cost reconciliation report using the FIFO method. Reconciling Costs Assembly Department Cost Reconciliation for June Costs to be accounted for:

Cost of beginning Work in Process Inventory Costs added to production during the period Total cost to be accounted for $ $ 10,039 199,751 209,790 Reconciling Costs Assembly Department Cost Reconciliation for June Costs to be accounted for: Cost of beginning Work in Process Inventory Costs added to production during the period Total cost to be accounted for Cost accounted for as follows:

Cost of ending Work in Process Inventory Cost of units transferred out Total cost accounted for $ $ $ $ 10,039 199,751 209,790 14,911 194,879 209,790 A Comparison of Costing Methods

In a lean production environment, FIFO and weighted-average methods yield similar unit costs. When considering cost control, FIFO is superior to weighted-average because it does not mix costs of the current period with costs of the prior period. Service Department Allocations Appendix 4B Operating Departments An operating department carries out the central purpose of the organization The Surgery Department at Mount Sinai Hospital.

The Geography Department at the University of Washington. A Production Department at Mitsubishi. Service Departments Service departments do not directly engage in operating activities. The Accounting

Department at Macys. The Human Resources Department at Walgreens. Interdepartmental Services Service Department Operating Department Costs of the service department become overhead costs to

the operating department Allocation Approaches Reciprocal Services Service Department 1 Service Department 2 When service departments provide services to each other we call them reciprocal services.

Learning Objective 10 Allocate service department costs to operating departments using the direct method. Direct Method Service Department (Cafeteria) Operating Department (Machining) Service Department (Custodial)

Operating Department (Assembly) Direct Method An Example Service Department Allocation Base Cafeteria Custodial Number of employees Square feet occupied Direct Method An Example

How much of the Cafeteria and Custodial costs should be allocated to each operating department using the direct method of cost allocation? Direct Method An Example Allocation base: Number of employees Direct Method An Example $360,000 30 = $216,000 20 + 30 Allocation base: Number of employees Direct Method An Example

25,000 $90,000 25,000 + 50,000 = $30,000 Allocation base: Square feet occupied Direct Method An Example Allocation base: Square feet occupied Learning Objective 11 To allocate service department costs to operating departments using the step-down

method. Step-Down Method Once a service departments costs are allocated, other service department costs are not allocated back to it. Service Department (Cafeteria) Operating Department (Machining)

Service Department (Custodial) Operating Department (Assembly) Step-Down Method There are three key points to understand regarding the step-down method: In both the direct and step-down methods, any amount of the allocation base attributable to the service department whose cost is being allocated is always ignored. Any amount of the allocation base that is attributable to a service department whose cost has already been allocated is ignored.

Each service department assigns its own costs to operating departments plus the costs that have been allocated to it from other service departments. Step-Down Method An Example We will use the same data used in the direct method example. Service Department Allocation Base Cafeteria Custodial Number of employees Square feet occupied Step-Down Method An Example

Allocate Allocate Cafeteria Cafeteria costs costs first first since since itit provides provides more more service service than than Custodial. Custodial. Step-Down Method An Example 10 $360,000 10 + 20 + 30

= $60,000 Allocation base: Number of employees Step-Down Method An Example 20 $360,000 10 + 20 + 30 = $120,000 Allocation base: Number of employees Step-Down Method An Example 30 $360,000

10 + 20 + 30 = $180,000 Allocation base: Number of employees Step-Down Method An Example New total = $90,000 original Custodial cost plus $60,000 allocated from the Cafeteria. Step-Down Method An Example 25,000 $150,000 25,000 + 50,000 = $50,000

Allocation base: Square feet occupied Step-Down Method An Example 50,000 $150,000 25,000 + 50,000 = $100,000 Allocation base: Square feet occupied Reciprocal Method Interdepartmental services are given full recognition rather than partial recognition as with

the step method. Service Department (Cafeteria) Operating Department (Machining) Service Department (Custodial) Operating Department (Assembly) Because of its mathematical complexity,

the reciprocal method is rarely used. Quick Check Data for Direct and Step-Down Methods The direct method of allocation is used. Allocation bases: Business school administration costs (ADMIN): Number of employees Business Administration computer services (BACS): Number of personal computers Quick Check How much cost will be allocated from Administration to Accounting? a. $ 36,000 b. $144,000

c. $180,000 d. $ 27,000 Quick Check How much cost will be allocated from Administration to Accounting? a. $ 36,000 b. $144,000 c. $180,000 d. $ 27,000 20 $180,000 = $36,000 20 + 80 Quick Check How much total cost will be allocated from ADMIN and BACS combined to the

Accounting Department? a. $ 52,500 b. $135,000 c. $270,000 d. $ 49,500 Quick Check How much total cost will be allocated from ADMIN and BACS combined to the Accounting Department? a. $ 52,500 b. $135,000 c. $270,000 d. $ 49,500 Quick Check Data The step method of allocation is used. Allocation bases:

Business school administration costs (ADMIN): Number of employees Business administration computer services (BACS): Number of personal computers Quick Check How much total cost will be allocated from ADMIN and BACS combined to the Accounting Department? a. $35,250 b. $49,072 c. $18,000 d. $26,333 Quick Check How much total cost will be allocated

from ADMIN and BACS combined to the Accounting Department? a. $35,250 b. $49,072 c. $18,000 d. $26,333 End of Chapter 4

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