# University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each.The following data appear in the company records for the current period:Maintenance Personnel Printing DevelopingMachine-hours — 1,700 1,700 5,100 Labor-hours 700 — 700 2,800 Department direct costs \$ 2,400 \$ 12,400 \$ 14,100 \$ 11,000 Required:Use the direct method to allocate these service department costs to the operating departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)

Answer: a. \$600 Maintenance costs to Printing

\$1,800 Maintenance costs to Developing

b. \$2,480 Personnel costs to Printing

\$9,920 Personnel costs to Developing

Explanation:

The Direct method as mentioned, allocates the service department costs to the Operating Departments.

Overheads from the Service Departments will not be allocated to the each other. In other words, Maintenance costs will not be allocated to Personnel and Vice Versa.

a. Allocating Maintenance Costs

Maintenance Cost is \$2,400 which is to be allocated on the basis is machine hours.

Printing had 1,700 in Machine hours.

Their allocation is,

= 1,700 / ( total machine hours in the two operating Department) * \$2,400

= 1,700 / (1,700 + 5,100) * 2,400

= 1,700 / 6,800 * 2,400

= \$600 Maintenance costs to Printing

= 5,100 / 6,800 * 2,400

= \$1,800 Maintenance costs to Developing

b. Allocating Personnel Costs

Maintenance Cost is \$12,400 which is to be allocated on the basis is labour hours.

Printing had 700 in labor hours.

Their allocation is,

= 700 / ( total machine hours in the two operating Department) * \$12,400

= 700 / ( 700 + 2,800) * 12,400

= 700 / 3,500 * 12,400

= \$2,480 Personnel costs to Printing.

= 2,800 / 3,500 * 12,400

= \$9,920 Personnel costs to Developing

## Related Questions

Monday island produces only yams yams and lemons lemons. the marginal cost of a yam yam is the number of lemons lemons that​ ______ to get one more​ ______.a. must be​ forgone; lemon lemon
b. people are willing to​ forgo; yam yam
c. must be​ forgone; yam yam
d. people are willing to​ forgo; lemon lemon

d. people are willing to forgo; lemon lemon

Marigold Company owns equipment that cost \$936,000 and has accumulated depreciation of \$395,200. The expected future net cash flows from the use of the asset are expected to be \$520,000. The fair value of the equipment is \$416,000. Prepare the journal entry, if any, to record the impairment loss.

Dr Impairment expense (p/l)   \$20,800

Cr Accumulated depreciation   \$20,800

Being entries to recognize the impairment of asset.

Explanation:

An asset is said to be impaired when the carrying amount is higher than the recoverable amount. The recoverable amount is the higher of the value in use (the expected future net cash flows from the use of the asset) and the  fair value less cost to sell.

Given;

Cost = \$936,000

Accumulated depreciation = \$395,200

Carrying amount = \$936,000 - \$395,200

= \$540,800

The recoverable amount is the expected future net cash flows from the use of the asset \$520,000 as this is higher than the fair value of the equipment which is \$416,000.

Since the carrying amount is higher than the recoverable amount, the asset is impaired.

Impairment = \$540,800 - \$520,000

= \$20,800

The journal entries,

Dr Impairment expense (p/l)   \$20,800

Cr Accumulated depreciation   \$20,800

Being entries to recognize the impairment of asset.

An inferior good is Multiple Choice A. one whose demand curve will shift rightward as incomes rise.

B. not accurately defined by any of these statements.

C. one that has not been approved by the Federal Food and Drug Administration.

D. one whose price and quantity demanded vary directly.

B. not accurately defined by any of these statements.

Explanation:

An inferior good is defined as one whose the quantity demanded decreases as the income of its consumers increases and vice versa.

Option A is incorrect because the income elasticity for inferior goods is negative and therefore, as the income of the consumers increases, the demand curve shifts to the left.

Option C is incorrect because an inferior good does not necessarily mean a fake good. A good can be inferior but yet meet all the standards for approval by the FDA.

Option D is incorrect. The price and quantity demand for inferior goods, just like normal goods do not vary directly. This is only applicable to luxurious goods.

None of the statements in A, C, and D accurately defined an inferior goods.

Hence, the correct option is B.

B. not accurately defined by any of these statements.

Explanation:

Inferior goods are goods whose demand decreases as the consumers income increases. This is different for normal goods in that the more the consumer earns, the more he/she tends to buy.

As such, inferior goods are not necessarily goods that has not been approved by the Federal Food and Drug Administration.

For Inferior goods, prices and quantity demanded do not vary proportionately.

Furthermore, the demand curve for an inferior good shifts out (rightward) when income decreases and shifts in when income increases.

Question Help The production demand for widgets for a​ 250-workday year is​ 7,500 units. Ordering costs are​ \$25.00 per order and carrying costs are​ \$9.00 per unit per year. Four days must be allowed between order placement and order receipt. What is the reorder​ point, assuming known and constant​ variables?

120

Explanation:

Data provided in the question:

Number of workdays in a year = 250

Demand, D = 7,500 units

Ordering costs, F =​ \$25.00 per order

Carrying costs, C =​ \$9.00

Now,

Reorder point = Lead Time in days × Average Daily Demand

also,

Average Daily Demand = Demand ÷ Number of workdays in a year

= 7500 ÷ 250

= 30

Thus,

Reorder point = 4 × 30

= 120

QS 3-7 Adjusting prepaid (deferred) expenses LO P1 For each separate case, record the necessary adjusting entry. On July 1, Lopez Company paid \$2,900 for six months of insurance coverage. No adjustments have been made to the Prepaid Insurance account, and it is now December 31. Zim Company has a Supplies account balance of \$8,400 at the beginning of the year. During the year, it purchased \$3,700 of supplies. As of December 31, a physical count of supplies shows \$1,650 of supplies available. Prepare the year-end adjusting entries to reflect expiration of the insurance and correctly report the balance of the Supplies account and the Supplies Expense account as of December 31.

December 31:

Debit Insurance Expense \$2,900

Credit Prepaid Insurance Account \$2,900

To record the insurance expense for the year.

Debit Supplies Expense \$10,450

Credit Supplies Account \$10,450

To record the supplies expense for the year.

Explanation:

a) The whole portion of Prepaid Insurance has expired since payment was made for 6 months on July 1.  This covers the period from July 1 to December 31.

b) The total supplies inventory for the year will be \$12,100 (\$8,400 + 3,700).  Since the physical count shows \$1,650 of supplies available, it means that the difference \$10,450 (\$12,100 - 1,650) had been used.   This portion is therefore expensed in accordance with the accrual concept.

The necessary adjusting entries for Lopez Company would be debiting Insurance Expenses and crediting Prepaid Insurance. For Zim Company, used supplies would be debited to Supplies Expense and credited to the Supplies account.

### Explanation:

The two situations mentioned involve adjusting entries for prepaid and consumed expenses. It is necessary to adjust these periodically to accurately present the financial statements of a company.

In the case of Lopez Company, they paid \$2,900 for six months of insurance coverage starting July 1. As it is now December 31, five months of the insurance has been used, with one month still not used (prepaid). Thus, the necessary adjusting entry would be a debit to Insurance Expense of \$2,416.67 (5/6 x \$2,900) and a credit to Prepaid Insurance of \$2,416.67.

For Zim Company, their total supplies for the year is the beginning balance plus additional purchases (\$8,400 + \$3,700 = \$12,100). As of December 31, only \$1,650 worth of supplies are still available. This means \$10,450 worth of supplies have been used. This would be debited to Supplies Expense and credited to the Supplies account.

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Most voluntary changes in accounting principles are reported retrospectively. This means for each year reported in the comparative statements, we make those statements appear as if the newly adopted account­ing method had been applied all along. A journal entry is created to adjust all account balances affected as of the date of the change. In the first set of financial statements after the change, a disclosure note describes the change and justifies the new method as preferable. It also describes the effects of the change on all items affected, including the fact that the retained earnings balance was revised in the statement of shareholders’ equity.Melas Company changed from the LIFO to the FIFO inventory costing method on January 1, Year 3. Inventory values at the end of each year since the inception of the company are as follows:

FIFO LIFO
Year 1 \$195,000 \$177,500
Year 2 \$390,000 \$355,000

Ignoring income tax considerations, prepare the appropriate journal entry, dated January 1, Year 3, to report this accounting change. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)