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Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating departments, organized according to the special Industry each department serves, are health care, retail, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Department Human Resources Billing Health Care 20 $ 900,000 Retail Legal Services Total Allocation Rate Complete this question by entering your answers in the tabs below. Req B2 Billing $ 2,310,000 Weight of Base *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Solomon adopts the direct method. The company uses the number of employees as the base for allocating the human resources department costs and department annual revenue as the base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. < Req A1 50 Req A1 Reg A2 Req B1 Req C1 Req C2 Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs. Allocated Cost $ S Health Care 0 0 0 $ 6,130,000 $ 10,300,000 0 0 203 Retail Req A2 > 153 $ 4,930,000 $ 5,550,000 Legal Services 94 $ 2,930,000 $ 4,150,000

Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating departments, organized according to the special Industry each department serves, are health care, retail, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Department Human Resources Billing Health Care 20 $ 900,000 Retail Legal Services Total Allocation Rate Complete this question by entering your answers in the tabs below. Req B2 Billing $ 2,310,000 Weight of Base *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Solomon adopts the direct method. The company uses the number of employees as the base for allocating the human resources department costs and department annual revenue as the base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. < Req A1 50 Req A1 Reg A2 Req B1 Req C1 Req C2 Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs. Allocated Cost $ S Health Care 0 0 0 $ 6,130,000 $ 10,300,000 0 0 203 Retail Req A2 > 153 $ 4,930,000 $ 5,550,000 Legal Services 94 $ 2,930,000 $ 4,150,000

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...
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Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating departments, organized according to the special Industry each department serves, are health care, retall, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Department Human Resources Billing Health Care Retail Req A2 Legal Services Total 20 $ 900,000 Complete this question by entering your answers in the tabs below. Allocation Rate Req B1 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Solomon adopts the direct method. The company uses the number of employees as the base for allocating the human resources department costs and department annual revenue as the base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. Req B2 Billing Weight of Base = $ 2,310,000 = 50 < Req A1 Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs. S Health Care 203 Req C1 Allocated Cost $ $ 6,130,000 $ 10,300,000 0 0 0 0 0 Retail Reg C2 153 $ 4,930,000 $ 5,550,000 Legal Services 94 Req A2 > $ 2,930,000 $ 4,150,000
Transcribed Image Text:Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating departments, organized according to the special Industry each department serves, are health care, retall, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Department Human Resources Billing Health Care Retail Req A2 Legal Services Total 20 $ 900,000 Complete this question by entering your answers in the tabs below. Allocation Rate Req B1 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Solomon adopts the direct method. The company uses the number of employees as the base for allocating the human resources department costs and department annual revenue as the base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. Req B2 Billing Weight of Base = $ 2,310,000 = 50 < Req A1 Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs. S Health Care 203 Req C1 Allocated Cost $ $ 6,130,000 $ 10,300,000 0 0 0 0 0 Retail Reg C2 153 $ 4,930,000 $ 5,550,000 Legal Services 94 Req A2 > $ 2,930,000 $ 4,150,000
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