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Required information [The following information applies to the questions displayed below.] Data Performance, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Carol Bingham, a pricing analyst, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Carol is considering three different methods of the departmental allocation approach to allocate overhead costs: the direct method, the step method, and the reciprocal method. She assembled the following data from the two service departments, information systems and facilities: a. b. Budgeted overhead (base) Information Systems (computer hours) Facilities (square feet) C. Service Departments Information Systems $ 368,000 240 Direct Method Step Method (Information Systems Goes First) Step Method (Facilities Goes First) Reciprocal method Computer Facilities Programming $ 184,000 $ 736,000 600 1,200 960 Production Departments Information Systems Consulting $ 874,000 Required: 1. Using computer usage time as the allocation base for the information systems department and square feet of floor space as the application base for the facilities department, apply overhead from these service departments to the production departments and determine the total cost of each production department using these three methods: a. Direct method. b. Step method (both for the information systems department going first and for the facilities department going first). c. Reciprocal method. Programming Consulting 300 600 Software Training Total $ 575,000 $ 2,737,000 (For all requirements, do not round intermediate calculations. Round final answers to the nearest dollar. Totals may be off by $1 due to rounding.) Training 900 600 3,000 2,400 Total

Required information [The following information applies to the questions displayed below.] Data Performance, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Carol Bingham, a pricing analyst, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Carol is considering three different methods of the departmental allocation approach to allocate overhead costs: the direct method, the step method, and the reciprocal method. She assembled the following data from the two service departments, information systems and facilities: a. b. Budgeted overhead (base) Information Systems (computer hours) Facilities (square feet) C. Service Departments Information Systems $ 368,000 240 Direct Method Step Method (Information Systems Goes First) Step Method (Facilities Goes First) Reciprocal method Computer Facilities Programming $ 184,000 $ 736,000 600 1,200 960 Production Departments Information Systems Consulting $ 874,000 Required: 1. Using computer usage time as the allocation base for the information systems department and square feet of floor space as the application base for the facilities department, apply overhead from these service departments to the production departments and determine the total cost of each production department using these three methods: a. Direct method. b. Step method (both for the information systems department going first and for the facilities department going first). c. Reciprocal method. Programming Consulting 300 600 Software Training Total $ 575,000 $ 2,737,000 (For all requirements, do not round intermediate calculations. Round final answers to the nearest dollar. Totals may be off by $1 due to rounding.) Training 900 600 3,000 2,400 Total

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter1: Introduction To Managerial Accounting
Section: Chapter Questions
Problem 6E
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Required information [The following information applies to the questions displayed below.] Data Performance, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Carol Bingham, a pricing analyst, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Carol is considering three different methods of the departmental allocation approach to allocate overhead costs: the direct method, the step method, and the reciprocal method. She assembled the following data from the two service departments, information systems and facilities: a. b. Budgeted overhead (base) Information Systems (computer hours) Facilities (square feet) C. Service Departments Information Systems $ 368,000 240 Direct Method Step Method (Information Systems Goes First) Step Method (Facilities Goes First) Reciprocal method Computer Facilities Programming $ 184,000 $ 736,000 600 1,200 960 Production Departments Information Systems Consulting $ 874,000 Required: 1. Using computer usage time as the allocation base for the information systems department and square feet of floor space as the application base for the facilities department, apply overhead from these service departments to the production departments and determine the total cost of each production department using these three methods: a. Direct method. b. Step method (both for the information systems department going first and for the facilities department going first). c. Reciprocal method. Programming Consulting 300 600 Software Training Total $ 575,000 $ 2,737,000 (For all requirements, do not round intermediate calculations. Round final answers to the nearest dollar. Totals may be off by $1 due to rounding.) Training 900 600 3,000 2,400 Total
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] Data Performance, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Carol Bingham, a pricing analyst, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Carol is considering three different methods of the departmental allocation approach to allocate overhead costs: the direct method, the step method, and the reciprocal method. She assembled the following data from the two service departments, information systems and facilities: a. b. Budgeted overhead (base) Information Systems (computer hours) Facilities (square feet) C. Service Departments Information Systems $ 368,000 240 Direct Method Step Method (Information Systems Goes First) Step Method (Facilities Goes First) Reciprocal method Computer Facilities Programming $ 184,000 $ 736,000 600 1,200 960 Production Departments Information Systems Consulting $ 874,000 Required: 1. Using computer usage time as the allocation base for the information systems department and square feet of floor space as the application base for the facilities department, apply overhead from these service departments to the production departments and determine the total cost of each production department using these three methods: a. Direct method. b. Step method (both for the information systems department going first and for the facilities department going first). c. Reciprocal method. Programming Consulting 300 600 Software Training Total $ 575,000 $ 2,737,000 (For all requirements, do not round intermediate calculations. Round final answers to the nearest dollar. Totals may be off by $1 due to rounding.) Training 900 600 3,000 2,400 Total
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