Krenz Foundry Has 3 Support Departments and 2 Operating Departments

question 44

Essay

Krenz Foundry has 3 support departments and 2 operating departments. Support cost and allocation base information is provided below.
Support Departments Operating Departments
Maintenance Food Service Personnel Casting Finishing
Direct support costs $10,000 $20,000 $15,000
Allocation bases:
Employees 10 8 9 20 30
Square metres 2,000 3,000 1,000 10,000 5,000
Maintenance costs are allocated on the basis of square metres, and the other support costs are allocated on the basis of number of employees. Maintenance provides the most services to other support departments, and food service provides the next most services to other support departments.
a)If the direct method of allocation is used, calculate the maintenance department cost that will be allocated to:
1)Personnel
2)Casting
b)If the step-down method is used, calculate the maintenance department cost that will be allocated to:
1)Personnel
2)Casting
c)If the step-down method is used, calculate the percent of personnel department costs that will be allocated to each of the following. (Note: You are not being asked for the dollar amount.)
1)Casting
2)Personnel
a)If the direct method of allocation is used, calculate the maintenance department cost that will be allocated to:

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Definitions:

Financial Reporting Releases (FRRs)

Official documents issued by regulatory bodies, providing guidelines and interpretations related to financial reporting standards.

Accounting Principles

Fundamental concepts and guidelines for financial reporting and accounting practices, beyond those defined strictly by GAAP.

Moratorium

A temporary prohibition or suspension of an activity or a law that allows a delay in the payment of debts or obligations.

Proxy Statements

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