1. Medusa Company allocates costs from the payroll department (S1) and the maintenance department (S2) to the molding (P1), finishing (P2), and packaging (P3) departments.
Payroll department costs are allocated based on the number of employees in the department and maintenance department costs are allocated based on the number of square feet which the production department occupies within the factory. Information about the departments is presented below:
|
|
Number of
|
Number of Square
|
|
Department
|
Costs
|
Employees
|
Feet Occupied
|
|
Payroll (S1)
|
$134,000
|
2
|
2,000
|
|
Maintenance (S2)
|
$220,000
|
8
|
64,000
|
|
Molding (P1)
|
|
64
|
100,000
|
|
Finishing (P2)
|
|
42
|
60,000
|
|
Packaging (P3)
|
|
22
|
40,000
|
Medusa uses the direct method to allocate costs. Round all answers to the nearest dollar.What amount of the payroll department costs will be allocated to the molding department?
2. Ritz Company sells fine collectible statues and has implemented activity-based costing. Costs in the shipping department have been divided into three cost pools.
The first cost pool contains costs that are related to packaging and shipping and Rand has determined that the number of boxes shipped is an appropriate cost driver for these costs. The second cost pool is made up of costs related to the final inspection of each item before it is shipped and the cost driver for this pool is the number of individual items that are inspected and shipped.
The final cost pool is used for general operations and supervision of the department and the cost driver is the number of shipments. Information about the department is summarized below:
| Cost Pool |
Total Costs |
Cost Driver |
Annual Activity |
| Packaging and shipping |
$161,300 |
Number of boxes shipped |
22,200 boxes |
| Final inspection |
$204,000 |
Number of individual items shipped |
99,900 items |
| General operations and supervision |
$80,500 |
Number of orders |
9,000 orders |
During the period, the Far East sales office generated 686 orders for a total of 6,070 items. These orders were shipped in 1,429 boxes.
What amount of shipping department costs should be allocated to these sales?