Question

th-/mail/inbox Sign in MBAS40HomeworkDueWeek5 Compatibility Mode - Saved to this PC Layout References Mailings Review View Help Tell me what you want to do Quantum (11 points Quantum currently allocates their repair and utility dollars to their assembly, fabricating, and finishing department using the direct method of service center cost allocation. Repair dollars are allocated using direct labor hours and utility dollars are allocated using square footage. DLH Sq. Ft. RepairUties Assembly Fabricating Finishing Total Costs 8,000,000 10,000,000 $4,000,000 $ 3,500,000 4,500,000 $30,000,000 6,000 10,000 25,000 Repair 5,000 15,000 10,000 9,000 45,000 Utilities 7,000 30,000 45,000 117,000 a) Calculate the amounts to be allocated to the production departments using the direct method b) Calculate the amounts to be allocated to the production departments using the step method c) Write a memo to the President explaining the differences in the results

Please can i get an answer to these questions, especially question C

Answer 1

a) Allocation to the production deptts using direct method:
	Repair	Utilities	Assembly	fabricating	Finishing	Total
Costs	8000000	10000000	4000000	3500000	4500000	30000000
allocation:
Repair	-8000000		1920000	3200000	2880000	0
Utilities		-10000000	2500000	3000000	4500000	0
Total Allocated Costs	0	0	8420000	9700000	11880000	30000000
b) Allocation to the production deptts using step method:
	Repair	Utilities	Assembly	fabricating	Finishing	Total
Costs	8000000	10000000	4000000	3500000	4500000	30000000
allocation:
Repair	-8000000	3000000	1200000	2000000	1800000	0
Sub total	0	13000000	5200000	5500000	6300000	30000000
second allocation:
Utilities		-13000000	3250000	3900000	5850000	0
Total Allocated Costs	0	0	8450000	9400000	12150000	30000000
C) TO THE PRESIDENT :
There is a difference between step method and direct method :
1) the step method is a sequential process where services departments are allocated in order of their
importance to the other service and production department.
2) the direct method is allocating the service department costs to production departments
only and no allocation to service department to service department involved.
3) The step method of allocation is more accurate than direct method.