Exercise 11-29 (Algo) Cost Allocation: Step Method (LO 11-1) Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments. Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs a. The order of allocation starts with IT. b. The order of allocation starts with HR. IT Required: Use the step method to allocate the service costs, using the following: From: Service department costs HR IT Total costs S 16 $ 155,000 $ 265,400 Complete this question by entering your answers in the tabs below. HR HR 1,600 0 Required A Required B Use the step method to allocate the service costs, using the following: The order of allocation starts with HR. Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. 0 $ Publishing 1,600 24 $ 430,000 Cost Allocation To: IT < Required A Publishing 0 S 0 $ Binding Required B Binding > 4,800 40 $ 390,000

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyz…