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Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departmen organized according to the special industry each department serves, are health care, retail, and legal services. The billing depart supports only the three operating departments, but the human resources department supports all operating departments and th billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Billing Human Resources 10 $720,000 $1,428,000 $6,000,000 Department Req A2 Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Req B1 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company the number of employees as the base for allocating human resources department costs and department annual revenue as th base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Compton adopts the direct method. The company the number of employees as the base for allocating the human resources department costs and department annual revenue a base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. + + 20 + + Req B2 Billing Health Care < Req C1 Retail $4,800,000 $9,000,000 $6,200,000 Compute the total allocated cost of service centers for each operating department using direct method. Total Allocated Human Resources Cost $ $ 80 Req C1 Req C2 0 0 0 0 60 Legal Services Req C2 40 $2,800,000 $4,800,000

Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departmen organized according to the special industry each department serves, are health care, retail, and legal services. The billing depart supports only the three operating departments, but the human resources department supports all operating departments and th billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Billing Human Resources 10 $720,000 $1,428,000 $6,000,000 Department Req A2 Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Req B1 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company the number of employees as the base for allocating human resources department costs and department annual revenue as th base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Compton adopts the direct method. The company the number of employees as the base for allocating the human resources department costs and department annual revenue a base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. + + 20 + + Req B2 Billing Health Care < Req C1 Retail $4,800,000 $9,000,000 $6,200,000 Compute the total allocated cost of service centers for each operating department using direct method. Total Allocated Human Resources Cost $ $ 80 Req C1 Req C2 0 0 0 0 60 Legal Services Req C2 40 $2,800,000 $4,800,000

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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Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departmen organized according to the special industry each department serves, are health care, retail, and legal services. The billing depart supports only the three operating departments, but the human resources department supports all operating departments and th billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Billing Human Resources 10 $720,000 $1,428,000 $6,000,000 Department Req A2 Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Req B1 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company the number of employees as the base for allocating human resources department costs and department annual revenue as th base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Compton adopts the direct method. The company the number of employees as the base for allocating the human resources department costs and department annual revenue a base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. + + 20 + + Req B2 Billing Health Care < Req C1 Retail $4,800,000 $9,000,000 $6,200,000 Compute the total allocated cost of service centers for each operating department using direct method. Total Allocated Human Resources Cost $ $ 80 Req C1 Req C2 0 0 0 0 60 Legal Services Req C2 40 $2,800,000 $4,800,000
Transcribed Image Text:Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departmen organized according to the special industry each department serves, are health care, retail, and legal services. The billing depart supports only the three operating departments, but the human resources department supports all operating departments and th billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Billing Human Resources 10 $720,000 $1,428,000 $6,000,000 Department Req A2 Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Req B1 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company the number of employees as the base for allocating human resources department costs and department annual revenue as th base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Compton adopts the direct method. The company the number of employees as the base for allocating the human resources department costs and department annual revenue a base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. + + 20 + + Req B2 Billing Health Care < Req C1 Retail $4,800,000 $9,000,000 $6,200,000 Compute the total allocated cost of service centers for each operating department using direct method. Total Allocated Human Resources Cost $ $ 80 Req C1 Req C2 0 0 0 0 60 Legal Services Req C2 40 $2,800,000 $4,800,000
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