School of Business and School of Education. Each of the operating departments uses the services of the company's two support departments: IT - Department and HR - Department. Additionally, the IT and HR departments use the services of each other. Data concerning the past year are as follows: Support Departments Operating Department IT HR School of School of Department HR - Dept. Business Education Total Budgeted Overhead Cost before any $437,500 $375,120 $ 825,250 $956,330 $2,594,200 departmental cost allocation Support work furnished by IT - Dept. Budgeted IT Salaries 0 $20,000 $80,000 $100,000 $200,000 Percentage 0 10.00% 40.00% 50.00% 100.00% Support work furnished by HR - Dept. Budgeted IT Service hours 1250 0 3,000 2,000 6, 250 Percentage 20.00% 0 48.00 % 32.00 % 100.00% Directions: 1. What are the total overhead costs of the operating departments (Business and Education) after the support - department costs of the IT Dept. and Human Resource Dept. have been allocated using (a) the direct method, (b) the step-down method (allocate IT Department first), (c) the step-down method (allocate Human Resource Department first), and (d) the reciprocal method?

School of Business and School of Education. Each of the operating departments uses the services of the company's two support departments: IT - Department and HR - Department. Additionally, the IT and HR departments use the services of each other. Data concerning the past year are as follows: Support Departments Operating Department IT HR School of School of Department HR - Dept. Business Education Total Budgeted Overhead Cost before any $437,500 $375,120 $ 825,250 $956,330 $2,594,200 departmental cost allocation Support work furnished by IT - Dept. Budgeted IT Salaries 0 $20,000 $80,000 $100,000 $200,000 Percentage 0 10.00% 40.00% 50.00% 100.00% Support work furnished by HR - Dept. Budgeted IT Service hours 1250 0 3,000 2,000 6, 250 Percentage 20.00% 0 48.00 % 32.00 % 100.00% Directions: 1. What are the total overhead costs of the operating departments (Business and Education) after the support - department costs of the IT Dept. and Human Resource Dept. have been allocated using (a) the direct method, (b) the step-down method (allocate IT Department first), (c) the step-down method (allocate Human Resource Department first), and (d) the reciprocal method?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 2BE: Support department allocations The centralized computer technology department of Hardy Company has...

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