The following is a partially completed lower section of a departmental expense allocation for Cozy Bookstore. It reports the total amounts of direct and indirect expenses allocated to its five (5) departments. Allocate the expenses of the two service departments (advertising and purchasing) to the three operating departments and provide the complete income statement. Advertising and purchasing department expenses are allocated to operating departments on the basis of dollar sales and purchase orders, respectively. Information about the allocation bases for the three operating departments follows.

Part 1: Allocate the costs of the 3 service departments using the direct method. Part 2: Allocate the costs of the 3 service departments using the step method, with the order determined by the greater percentage usage. Part 3: Allocate the costs of the 3 service departments using the reciprical method.  Part 4:What is one strength and one drawback of each of the methods?

Activity-based costing can be beneficial in allocating selling and administrative expenses to various products for managerial decision making. Which of the following would be the best allocation base for help desk costs? a. number of sales employees Ob. number of products sold c. number of calls Od. square footage of the help desk office

Assume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation. Marley's ManufacturingIncome StatementMonth Ending August 31, 2018   Dept. A Dept. B Sales $21,000   $52,000   Cost of goods sold 9,870   27,040   Gross profit $11,130   $24,960   Expenses:         Utility expenses $840   $3,120   Wages expense 5,040   10,920   Costs allocated from corporate 2,100   14,560   Total expenses $7,980   $28,600   Operating income/(loss) in dollars $fill in the blank 1   $fill in the blank 2   Operating income/(loss) in percentage fill in the blank 3 % fill in the blank 4 % Department B had…