Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Q1) Northstar Company has two operating divisions-Machine Tools and Special Products. Company has a maintenance department that services equipment in both divisions. Costs of operating maintenance department are budgeted at $80,000 per month plus $0.50 per machine-hour. Fixed costs of maintenance department are determined by peak-period requirements. Machine Tools Division needs 65% of peak-period capacity, and Special Product Division requires 35%.

For October, Machine Tools Division evaluated that it would operate at 90,000 machine-hours of activity and Special Product Division evaluated that it would operate at 60,000 machine-hours of activity. Though, due to labor unrest and unexpected strike, Machine Tools Division worked only 60,000 machine-hours during month. Special Product Division worked 60,000 machine-hours as planned.

Cost records in maintenance department show that actual fixed cost for October totaled $85,000 and that actual variable cost totaled $78,000.

problems:

1. How much maintenance department cost must be charged to each division for October?

2. Suppose that company follows practice of allocating all maintenance department costs incurred each month to divisions in proportion to actual machine-hours recorded in each division for month. On this basis, how much cost would be assigned to each division for October?

3. What criticisms can you make of allocation method used in part (2) above?

4. If managers of operating departments know that fixed service costs are going to be assigned on the basis of peak-period requirements, determine their probable strategy as they report their estimate of peak-period needs to company's budget committee? As a member of top management, what would you do to neutralize any such strategies?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M919741

Have any Question? 


Related Questions in Accounting Basics

Almas recording studio rents studio time to musicians in

Alma's Recording Studio rents studio time to musicians in 2-hour blocks. Each session includes the use of the studio facilities, a digital recording of the performance, and a professional music producer/mixer. Anticipate ...

Accounting for nonfinancial assets will experience some

Accounting for nonfinancial assets will experience some major changes with the convergence to IFRS. One of the key issues will be that of fair value. Research this topic, and give your argument for or against the use of ...

Business assignmentthe comany i have choosen is upsresearch

Business Assignment The comany i have choosen is UPS. Research a company that interests you from the Fortune 500. (A list will be provided). Analyze what they do. What business are they in? What industry? How have they b ...

Accounting discussiona local movie theater owner explains

Accounting Discussion A local movie theater owner explains to you that ticket sales on weekends and evenings are strong, but attendance during the weekdays, Monday through Thursday, is poor. The owner proposes to offer a ...

Accounting questionfollowing the completion of the

Accounting Question: Following the completion of the investigation of a potential fraud case, you are informed by your manager that the case will be brought to trial. As part of the litigation process you will be asked t ...

Discussionpart 1 please respond the following question no

Discussion Part 1 please respond the following question no less then 350 words (original work, no plagiarism, 1 reference "learning experience and application of knowledge" please respond to the following: • Assume you h ...

Accountinguse the internet to research an annual report of

Accounting Use the Internet to research an annual report of a retail company. • Then, imagine you are an investor or creditor; suggest the ratios that you believe would provide an investor or creditor with the most impor ...

Forwards and options respond to each of the following

Forwards and Options Respond to each of the following questions (notice that there are main questions and sub-questions below some of the main questions - don't miss any!) 1. Suppose you enter into a long 6-month forward ...

Conduct a cost analysis of gas versus electric vehicle find

Conduct a cost analysis of gas versus electric vehicle. Find the break-even point assuming gasoline is $3.00/gallon with an average of 22 miles per gallon that costs $25,000. Compared to an electric vehicle for $35,000 t ...

1 prepare an answer to management application ma 13-31

1. Prepare an answer to Management Application MA 13-31, which can be found on page 13-24 of your text (the question concerns ExxonMobil). 2. Oregon Manufacturing had the following data for the past three months.   Janua ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro