Buildz Corp Has Been Servicing the Production Casting Department for Five

question 12

Essay

Buildz Corp has been servicing the Production Casting Department for five years. Beginning next year, the company is adding a Production Molding Department to compliment the materials produced by the Production Casting Department. As a result, data center costs are expected to increase from $800,000 per year to $1,000,000 per year. The Production Molding Department will use 20% of the data center efforts.
Required:
a.Using the stand-alone cost-allocation method, identify the amount of data center cost that will be allocated to Production Casting and the Production Molding Department next year.
b.Using the incremental cost-allocation method, identify the amount of data center cost that will be allocated to Production Casting and the Production Molding Department next year.

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Definitions:

Kaizen

A Japanese term for 'continuous improvement,' focusing on incremental changes in processes to enhance efficiency and quality.

Total Quality Management (TQM)

A comprehensive management approach that focuses on continuous quality improvement of products and services by involving all members of an organization.

Principles

Fundamental truths, rules, or standards that form the basis for reasoning, behavior, or the belief system of an individual or organization.

Deming's 14 Points

A set of management practices proposed by W. Edwards Deming to improve effectiveness, productivity, and performance within an organization.