Etching Department and the Finishing Department

Etching Department and the Finishing Department

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Etching Department and the Finishing Department

Problem 8-27

Visit the website for one of the following companies, or a different company of your choosing.

Coca-Cola www.coca-cola.com

Bridgestone www.bridgestone.com

Motorola www.motorola.com

Casio www.casio.com

Toyota www.toyota.com

Xerox www.xerox.com

Read about the company’s products and operations. Discuss the pros and cons of absorption

and variable costing as the basis for product costing if the firm uses cost-based pricing.

Problem 17-26

Celestial Artistry Company is developing departmental overhead rates based on direct-labor hours

for its two production departments, Etching and Finishing. The Etching Department employs

20 people and the Finishing Department employs 80 people. Each person in these two departments

works 2,000 hours per year. The production-related overhead costs for the Etching Department are

budgeted at $200,000, and the Finishing Department costs are budgeted at $320,000. Two service

departments, Maintenance and Computing, directly support the two production departments. These

service departments have budgeted costs of $48,000 and $250,000, respectively. The production

departments’ overhead rates cannot be determined until the service departments’ costs are allocated.

The following schedule reflects the use of the Maintenance Department’s and Computing

Department’s output by the various departments.

Required:

1. Use the direct method to allocate service department costs. Calculate the overhead rates per direct labor hour for the Etching Department and the Finishing Department.
2. Use the step-down method to allocate service department costs. Allocate the Computing Department’s costs first. Calculate the overhead rates per direct-labor hour for the Etching Department and the Finishing Department.

RUBRIC
Excellent Quality 95-100%	Introduction 45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.		Literature Support 91-84  points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.			Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score 50-85%	40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.		83-76  points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.			52-49  points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality 0-45%	37-1 points The background and/or significance are missing. No search history information is provided.		75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.			48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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