Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT Accounting HR West East IT -- 0% 20% 40% 40% Accounting 0% -- 0% 40% 60% HR 10% 10% -- 60% 20% The direct costs of the service departments in the previous period were $91,000 for IT, $116,000 for Accounting, and $155,000 for HR. Required: Use the step method to allocate the service department costs to the two production departments. Allocate HR costs first, followed by IT, and then Accounting. Note: Amounts to be deducted should be indicated by a minus sign. IT Accounting HR West East Service department costs $ 0 HR allocation IT allocation Accounting allocation Total costs allocated $ 0 $ 0 $ 0 $ 0 $ 0
Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT Accounting HR West East IT -- 0% 20% 40% 40% Accounting 0% -- 0% 40% 60% HR 10% 10% -- 60% 20% The direct costs of the service departments in the previous period were $91,000 for IT, $116,000 for Accounting, and $155,000 for HR. Required: Use the step method to allocate the service department costs to the two production departments. Allocate HR costs first, followed by IT, and then Accounting. Note: Amounts to be deducted should be indicated by a minus sign. IT Accounting HR West East Service department costs $ 0 HR allocation IT allocation Accounting allocation Total costs allocated $ 0 $ 0 $ 0 $ 0 $ 0
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 28E: Minor Co. has a job order cost system and applies overhead based on departmental rates. Service...
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Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow:
| IT | Accounting | HR | West | East | |
|---|---|---|---|---|---|
| IT | -- | 0% | 20% | 40% | 40% |
| Accounting | 0% | -- | 0% | 40% | 60% |
| HR | 10% | 10% | -- | 60% | 20% |
The direct costs of the service departments in the previous period were $91,000 for IT, $116,000 for Accounting, and $155,000 for HR.
Required:
Use the step method to allocate the service department costs to the two production departments. Allocate HR costs first, followed by IT, and then Accounting.
Note: Amounts to be deducted should be indicated by a minus sign.
|
IT
|
Accounting
|
HR
|
West
|
East
|
|
|
Service department costs
|
$
0 |
||||
|
HR allocation
|
|||||
|
IT allocation
|
|||||
|
Accounting allocation
|
|||||
|
Total costs allocated
|
$
0 |
$
0 |
$
0 |
$
0 |
$
0 |
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