FINANCIAL DATA

12-4
Financial Data
Salary of vice president of production division
Salary of supervisor Department M
Salary of supervisor Department N
Direct materials cost Department M
Direct materials cost Department N
Direct labor cost Department M
Direct labor cost Department N
Direct utilities cost Department M
Direct utilities cost Department N
General factorywide utilities
Production supplies
Fringe benefits
Depreciation

$180,000
76,000
56,000
300,000
420,000
240,000
680,000
120,000
24,000
36,000
36,000
138,000
720,000

Nonfinancial Data
Machine hours department M 5,000
Machine hour’s department N
1,000
A. Identify the costs that are (1) direct costs of department M, (2) direct costs of department N
and (3) indirect costs.
B. Select the appropriate cost drivers for the indirect costs and allocate these costs to departments
M and N.
C. Determine the total estimated cost of the products made in departments M and N. Assume that
Maller produced 2,000 units of products M and 4,000 of prouduct N during the year. If Maller
prices its products M and for N?
12- 15
The Vest school of Vocational Technology has organized the school training programs into three
departments. Each department provides training in a different area as follows: nursing assistant,
dental hygiene, and office technology. The schools owner, Candice Vest, wants to know how
much it cost to operate each of the three departments. To accumulate the total cost for each
department, the accountant has identified several indirect costs that must be allocated to each.
These costs are $10,080 of telephone expense, $ 2,016 of supplies expense, $720,000 of office
rent, $144,000 of janitorial services, and $150,000 of salary paid to the dean of students. To
provide a reasonably accurate allocation of costs, the accountant has identified several possible
cost drivers. These drivers and their association with each department follow.
Cost Driver
Department 1
Department 2
Department 3
Number of telephones
28
16
19
Numbers of faculty members
20
16
12
Square footage of office space
28,000
16,800
12,000

Number of secretaries
2

2

2

A. Identify the appropriate cost objects.
B. Identify the appropriate cost driver for each indirect cost and compute the allocation rate for
assigning each indirect cost to the cost objects.
C. determine the amount of telephone expense that should be allocated to each of the three
departments.
D. Determine the amount of office expense that should be allocated to department 3
F. Determine the amount of office expense that should be allocated to department 2.
G. Identify two cost drivers not listed here that could be used to allocate the cost of the deaths
salary to the three departments.
13- 23
Materials cost ($ 25 per unit X 20,000) $ 500,000
Labor cost ($22 per unit X 20,000)
$ 440,000
Batch level costs (20 batches at $4,000per batch) 80,000
Product level cost 160,000
Total cost 1,510,000
Cost per unit = 1, 510,000 / 20,000 = $75.50
A. Kent Motels has offered to buy a batch of 500 blankets for $51 each. Ellis normal selling
price is $90 per unit. Based on the preceding quantitative data, should Kent accept the special
order? Support your answer with appropriate computations.
B. Would your answer to requirement a change if Kent offered to buy a batch of 1,000 blankets
for $ 51 per unit? Support your answer with appropriate computations.
C. Describe the qualitative factors that Ellis Quilting Company should consider before accepting
a special order to sell blankets to Kent Motels.