The Chapman Manufacturing Company Has Two Service Departments - Manufacturing

question 49

Essay

The Chapman Manufacturing Company has two service departments - manufacturing support and facilities management, and two production departments - assembly and packing/shipping. The distribution of each service department's efforts to the other departments is shown below: The direct operating costs of the departments (including both variable and fixed costs) were as follows: Required:
(calculate all ratios and percentages to 2 decimal places, for example 33.33%, and round all dollar amounts to the nearest whole dollar):
(1) Allocate the service department costs to the production departments using the direct method.
(2) Allocate the service department costs to the production departments using the step method with the support department going first.
(3) Allocate the service department costs to the production departments using the reciprocal method.

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Definitions:

Markup Percent

The percentage added to the cost price of goods to cover overhead and profit, determining the selling price.

Large Screen Televisions

Televisions with a diagonally measured screen size typically larger than 55 inches.

Dollar Markup

The difference between the cost of a product and its selling price, expressed in dollar terms.

Dealer's Cost

The actual cost to a dealer for the products they sell, often excluding additional expenses like marketing or transport.