Question: Beckett Manufacturing is a contract manufacturer
Beckett Manufacturing is a contract manufacturer that assembles products for other companies. Beckett has two service departments, Maintenance and Administration, and two operating divisions, Small Components and Large Components. The following data summarize the utilization of each service department:
![Beckett Manufacturing is a contract manufacturer that assembles products for other companies. Beckett has two service departments, Maintenance and Administration, and two operating divisions, Small Components and Large Components. The following data summarize the utilization of each service department:
Square feet of floor space required by each user is the allocation base for allocating the Maintenance department cost of $950,000. Number of employees in each department and division is used to allocate the Administration department cost of $567,000. Beckett uses the step-down method of allocating service department costs to the two operating divisions. The $950,000 and $567,000 amounts represent the operating costs of the Maintenance and Administration departments, respectively, and they do not include any cost allocations from the other service departments.
Required:
a. Allocate the two service department costs to the two operating divisions using the stepdown method where Maintenance is the first service department allocated and Administration is the second service department allocated.
b. Allocate the two service department costs to the two operating divisions using the stepdown method where Administration is the first service department allocated and Maintenance is the second service department allocated.
c. Calculate the allocated cost per square foot and the allocated cost per employee resulting from using the step-down method where Maintenance is the first service department allocated and Administration is the second service department allocated (as in part [a]).
d. Calculate the allocated cost per square foot and the allocated cost per employee resulting from using the step-down method where Administration is the first service department allocated and Maintenance is the second service department allocated (as in part [b]).
e. Describe why the costs per square foot and the costs per employee vary in parts (c) and (d) above.](../images/beckett-manufacturing-is-a-contract-manufacturer-that-assembles-products-for-other-companies-32351-1.jpg)
Square feet of floor space required by each user is the allocation base for allocating the Maintenance department cost of $950,000. Number of employees in each department and division is used to allocate the Administration department cost of $567,000. Beckett uses the step-down method of allocating service department costs to the two operating divisions. The $950,000 and $567,000 amounts represent the operating costs of the Maintenance and Administration departments, respectively, and they do not include any cost allocations from the other service departments.
Required:
a. Allocate the two service department costs to the two operating divisions using the stepdown method where Maintenance is the first service department allocated and Administration is the second service department allocated.
b. Allocate the two service department costs to the two operating divisions using the stepdown method where Administration is the first service department allocated and Maintenance is the second service department allocated.
c. Calculate the allocated cost per square foot and the allocated cost per employee resulting from using the step-down method where Maintenance is the first service department allocated and Administration is the second service department allocated (as in part [a]).
d. Calculate the allocated cost per square foot and the allocated cost per employee resulting from using the step-down method where Administration is the first service department allocated and Maintenance is the second service department allocated (as in part [b]).
e. Describe why the costs per square foot and the costs per employee vary in parts (c) and (d) above.
Transcribed Image Text:
Small Large Сomponents Allocation Service Maintenance Administration Components Base Dept. Cost Square feet of fоor space Number of Maintenance 50,000 300,000 400,000 250,000 $950,000 Administration 17 34 68 221 $567,000 employees
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