111. The human resources department for Hammond Corp. provides personnel services for two
departments in the Chicago office. The following budget has been prepared for the month.
Required (use three decimal places in your calculations):
a. If Hammond uses a dual rate for allocating its costs based on employees, how much cost will
be allocated to the two departments?
112. The Document Creation Center (DCC) for Aelerion Corp. provides document services for
three departments in the Denver office. The following budget has been prepared for the month.
Required (use three decimal places in your calculations):
a. If DCC uses a dual rate for allocating its costs; allocating fixed costs based on number of
documents and variable costs based on number of pages, how much cost will be allocated to the
three user departments?
113. The legal department for Buffet Corp. provides legal services for four departments in the
Omaha office. The following budget has been prepared for the month.
Required (use three decimal places in your calculations):
a. If Buffet uses a dual rate for allocating its costs, allocating fixed costs based on number of
contracts and variable costs based on number of pages reviewed, how much cost will be allocated
to the four user departments?
12–84
114. Wrigley Services has three divisions, commercial, retail, and consumer, that share the
common costs of the company’s computer server network. The annual common costs are
$1,200,000. You have been provided with the following information for the upcoming year:
Required (use three decimal places in your calculations):
a. What is the allocation rate for the upcoming year assuming Wrigley uses the single-rate method
and allocates common costs based on the number of connections? Calculate the allocated
amount for each division.
b. What is the allocation rate for the upcoming year assuming Wrigley uses the single-rate method
and allocates common costs based on the time on network? Calculate the allocated amount for
each division.
c. The cost accountant determined $850,000 of the server network’s costs were fixed and should
be allocated based on the number of connections. The remaining costs should be allocated based
on the time on the network. What is the total server network costs allocated to each division?
12–86
115. Comiskey has four divisions, commercial, retail, research, and consumer, that share the
common costs of the company’s computer server network. The annual common costs are
$2,400,000. You have been provided with the following information for the upcoming year:
Required (use three decimal places in your calculations):
a. What is the allocation rate for the upcoming year assuming Comiskey uses the single-rate
method and allocates common costs based on the number of connections? Calculate the
allocated amount for each division.
b. What is the allocation rate for the upcoming year assuming Comiskey uses the single-rate
method and allocates common costs based on the time on network? Calculate the allocated
amount for each division.
c. The cost accountant determined $1,700,000 of the server network’s costs were fixed and should
be allocated based on the number of connections. The remaining costs should be allocated based
on the time on the network. What is the total server network costs allocated to each division?
116. Jacobs Corp. has three divisions, commercial, retail, and consumer, that share the
common costs of the company’s computer server network. The annual common costs are
$2,400,000. You have been provided with the following information for the upcoming year:
Required (use three decimal places in your calculations):
a. What is the allocation rate for the upcoming year assuming Jacobs uses the single-rate method
and allocates common costs based on the number of connections? Calculate the allocated
amount for each division.
b. What is the allocation rate for the upcoming year assuming Jacobs uses the single-rate method
and allocates common costs based on the time on network? Calculate the allocated amount for
each division.
117. Marlin has three divisions, commercial, retail, and consumer, that share the common costs
of the company’s computer server network. The annual common costs are $2,400,000. You have
been provided with the following information for the upcoming year:
Required (use three decimal places in your calculations):
a. The cost accountant determined $1,800,000 of the server network’s costs were fixed and should
be allocated based on the number of connections. The remaining costs should be allocated based
on the time on the network. What is the total server network costs allocated to each division?
118. Sanper Corp. has four divisions, commercial, retail, research, and consumer, that share
the common costs of the company’s computer server network. The annual common costs are
$3,500,000. You have been provided with the following information for the upcoming year:
Required (use three decimal places in your calculations):
a. What is the allocation rate for the upcoming year assuming Sanper uses the single-rate method
and allocates common costs based on the number of connections?
b. What is the allocation rate for the upcoming year assuming Sanper uses the single-rate method
and allocates common costs based on the time on network? Calculate the allocated amount for
each division.
119. Charleston has four divisions, commercial, retail, research, and consumer, that share the
common costs of the company’s computer server network. The annual common costs are
$3,600,000. You have been provided with the following information for the upcoming year:
Required (use three decimal places in your calculations):
a. The cost accountant determined $2,300,000 of the server network’s costs were fixed and should
be allocated based on the number of connections. The remaining costs should be allocated based
on the time on the network. What is the total server network costs allocated to each division?
12–92
120. Redding has two divisions, Production and Support, that share the common costs of the
company’s communications network. The annual common costs are $4,500,000. You have been
provided with the following information for the upcoming year:
Required (use three decimal places in your calculations):
a. What is the allocation rate for the upcoming year assuming Redding uses the single-rate
method and allocates common costs based on the number of calls? Calculate the costs allocated
to each division.
b. What is the allocation rate for the upcoming year assuming Redding uses the single-rate
method and allocates common costs based on the time on the network? Calculate the costs
allocated to each division.
c. The cost accountant determined $2,700,000 of the communication network’s costs were fixed
and should be allocated based on the number of calls. The remaining costs should be allocated
based on the time on the network. What is the total communication network costs allocated to
each division?
121. Salinas has two divisions, Marketing and Finance, that share the common costs of the
company’s communications network. The annual common costs are $2,250,000. You have been
provided with the following information for the upcoming year:
Required (use three decimal places in your calculations):
a. What is the allocation rate for the upcoming year assuming Salinas uses the single-rate method
and allocates common costs based on the number of calls? Calculate the costs allocated to each
division.
b. What is the allocation rate for the upcoming year assuming Salinas uses the single-rate method
and allocates common costs based on the time on the network? Calculate the costs allocated to
each division.
122. Tofte has two divisions, Research and Sales, that share the common costs of the
company’s communications network. The annual common costs are $2,250,000. You have been
provided with the following information for the upcoming year:
Required (use three decimal places in your calculations):
a. The cost accountant determined $1,350,000 of the communication network’s costs were fixed
and should be allocated based on the number of calls. The remaining costs should be allocated
based on the time on the network. What is the total communication network costs allocated to
each division?
12–95
123. The Black Swan Company has three client-contact departments: Market Research,
Branding, and Promotion. Each department requires the services of the Legal Department for the
contracts that each undertakes. The size of the Legal Department was based on long–run
estimates of contracts. Information on the Legal Department’s budgeted and actual costs is as
follows:
The budget for the Legal Dept is $300,000 + $10/contract. The budgeted volume of contracts is
as follows:
The actual number of contracts for Market Research was 315, for Branding was 450, and for
Promotion was 720.
Required (use three decimal places in your calculations):
a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal
Department would be allocated to each of the producing departments?
b. If a dual charging rate is used, how much of the cost of the Legal Department would be
allocated to each of the producing departments
12–96
124. The Black Swan Company has three client-contact departments: Market Research,
Branding, and Promotion. Each department requires the services of the Legal Department for the
contracts that each undertakes. The size of the Legal Department was based on long–run
estimates of contracts. Information on the Legal Department’s budgeted and actual costs is as
follows:
The budget for the Legal Dept is $200,000 + $7.50/contract. The budgeted volume of contracts is
as follows:
The actual number of contracts for Market Research was 286, for Branding was 450, and for
Promotion was 675.
Required (use three decimal places in your calculations):
a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal
Department would be allocated to each of the producing departments?
b. If a dual charging rate is used, how much of the cost of the Legal Department would be
allocated to each of the producing departments
12–97
125. The Black Swan Company has three client-contact departments: Market Research,
Branding, and Promotion. Each department requires the services of the Legal Department for the
contracts that each undertakes. The size of the Legal Department was based on long–run
estimates of contracts. Information on the Legal Department’s budgeted and actual costs is as
follows:
The budget for the Legal Dept is $400,000 + $15/contract. The budgeted volume of contracts is
as follows:
The actual number of contracts for Market Research was 207, for Branding was 512, and for
Promotion was 820.
Required (use three decimal places in your calculations):
a. If a single charging rate based on budgeted usage is used, how much of the cost of the Legal
Department would be allocated to each of the producing departments?
b. If a dual charging rate is used, how much of the cost of the Legal Department would be
allocated to each of the producing departments
12–98
126. Scuderi Corporation has two operating divisions – Inland Division and Coast Division. The
company’s Customer Service Department provides services to both divisions. The variable costs of
the Customer Service Department are budgeted at $29 per order. The Customer Service
Department’s fixed costs are budgeted at $381,600 for the year. The fixed costs of the Customer
Service Department are determined based on the peak period orders.
At the end of the year, actual Customer Service Department variable costs totaled $219,905 and
fixed costs totaled $383,860. The Inland Division had a total of 1,520 orders and the Coast
Division had a total of 5,690 orders for the year.
Required:
a. Prepare a report showing how much of the Customer Service Department’s costs should be
charged to each of the operating divisions at the end of the year.
b. How much of the actual Customer Service Department costs should not be charged to the
operating divisions at the end of the year? Who should be held responsible for these uncharged
costs?
127. Warehouse Services is a service department in the Werner Company, providing storage
service to three operating departments. The company charges the costs of this department to
operating departments on the basis o cubic feet occupied.
Last year, Warehouse Services budgeted variable storage cost of $0.15 per cubic foot occupied.
The budgeted total fixed cost was $120,000, and was determined by the long-term storage needs
of the operating departments. Actual storage space occupied during the year, along with long–
term storage needs of operating departments, is given below:
Actual variable storage costs amounted to $0.16 per cubic foot occupied. Actual fixed storage
costs were $123,000.
Required:
a. Compute the amount of variable storage cost that should be charged to each operating
department at the end of the year for performance evaluation purposes.
b. Compute the amount of fixed storage cost that should be charged to each operating
department at the end of the year for performance evaluation purposes.