FINANCIAL ACCOUNTING
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ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Comprehensive support department allocations
Management at C. Pier Press has decided to allocate costs of the paper’s two support departments (administration and human resources) to the two revenue-generating departments (advertising and circulation). Administration costs are to be allocated on the basis of dollars of assets employed; human resources costs are to be allocated on the basis of number of employees. The following costs and allocation bases are available:
| Department | Direct Costs | Number of Employees | Assets Employed | |
|---|---|---|---|---|
| Administration | $390,750 | 5 | $193,550 | |
| Human resources | 246,350 | 4 | 145,850 | |
| Advertising | 478,900 | 6 | 381,200 | |
| Circulation | 676,300 | 13 | 935,150 | |
| Totals | $1,792,300 | 28 | $1,655,750 |
a. Using the direct method, allocate the support department costs to the revenue-generating departments.
Note: Round percentages in your calculation to the nearest whole percent (for example, round 34.5% to 35%).
Note: Round your final answer to the nearest whole dollar.
Total service costs allocated to Advertising: 192,150
Total service costs allocated to Circulation: 444,951
b. Using your answer to (a), what are the total costs of the revenue-generating departments after the allocations?
Advertising total costs $Answer
Circulation total costs $Answer
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