Problem 11-48 StepMethod with Three Service Depagrtments (LO 11-3)

Model, Inc., producesmodel automobiles made from metal. It operates two productiondepartments, Molding and Painting, and has three servicedepartments, Administration, Accounting, and Maintenance. Theaccumulated costs in the three service departments were $255,000,$416,000, and $191,000, respectively. Management is concerned thatthe costs of its service departments are getting too high. Inparticular, managers would like to keep the costs of servicedepartments under $3.50 per unit on average. You have been asked toallocate service department costs to the two production departmentsand compute the unit costs.

The company decidedthat Administration costs should be allocated on the basis ofsquare footage used by each production and service department.Accounting costs are allocated on the basis of number of employees.Maintenance costs are allocated on the basis of the dollar value ofthe equipment in each department. The use of each base by alldepartments during the current period follows:  
  

	Used by
AllocationBase	Administration			Accounting			Maintenance			Molding			Painting
Building area		11,000			61,100			47,000			329,000			32,900
Employees		28			16			56			126			70
Equipment value(in thousands)	$	50.00		$	200.00		$	15.50		$	150.00		$	50.00
Direct costs of theMolding Department included $242,500 in direct materials, $340,000in direct labor, and $105,000 in overhead. The PaintingDepartment’s direct costs consisted of $208,000 in directmaterials, $222,000 in direct labor, and $67,500 in overhead.    Required: a.Using the step method, determine the allocated costs and the totalcosts in each of the two producing departments. Ignore self-usage(for example, ignore work done by Administration for itself). Rankorder the allocation as follows: (1) Maintenance, (2) Accounting,and (3) Administration. (Do not round intermediatecalculations. Negative amounts should be indicatedby a minus sign.) 191000 MODEL,INC. StepMethod To Maintenance Accounting Administration Molding Painting Direct Costs $191,000 $416,000 $255,000 FROM Maintenance Accounting Administration Totals 191,000 416,000 255,000 $0 $0 b.Assume that 100,000 units were processed through these twodepartments. What is the unit cost for the sum of direct materials,direct labor, and overhead (1) for Molding, (2) for Painting, and(3) in total? (Do not round intermediatecalculations. Round your answers to 2 decimalplaces.) c. (1)Compute the cost per unit for the service department costsallocated to the production departments.(Do not round intermediatecalculations. Round your answers to 2 decimalplaces.)