Support Department Cost Allocation Fillory Illusion, Inc has two support departments, Human Resources and Janitorial, and two revenue departments, Entertainment and Protection. All costs are regarded as strictly variable. For November, the following is available: Support Department Revenue Departments Human Resources Janitorial Entertainment Protection Direct Costs 2$ 67,000 $20,000 2$ 128,000 $ 115,000 Actual Activity: Employees 20 Service Hours 120 510 170 REQUIRED: 1. If the company uses the direct method for allocating support department costs to revenue departments, what is the total cost allocated to Entertainment? What is the total cost allocated to Protection? 2. Assume the company uses the step method for allocating support department costs to revenue departments. The company begins with allocating the Human Resources Department cost first. What is the total cost allocated to Entertainment? What is the total cost allocated Protection? 3. Assume the company uses the algebraic (reciprocal) method for allocating support department costs to revenue departments. What are the equations that will determine the total cost of the support departments?
Support Department Cost Allocation Fillory Illusion, Inc has two support departments, Human Resources and Janitorial, and two revenue departments, Entertainment and Protection. All costs are regarded as strictly variable. For November, the following is available: Support Department Revenue Departments Human Resources Janitorial Entertainment Protection Direct Costs 2$ 67,000 $20,000 2$ 128,000 $ 115,000 Actual Activity: Employees 20 Service Hours 120 510 170 REQUIRED: 1. If the company uses the direct method for allocating support department costs to revenue departments, what is the total cost allocated to Entertainment? What is the total cost allocated to Protection? 2. Assume the company uses the step method for allocating support department costs to revenue departments. The company begins with allocating the Human Resources Department cost first. What is the total cost allocated to Entertainment? What is the total cost allocated Protection? 3. Assume the company uses the algebraic (reciprocal) method for allocating support department costs to revenue departments. What are the equations that will determine the total cost of the support departments?
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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