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ng and Business Consultants provides a variety of consulting services to a diverse range of clients. The company has rt departments and three revenue-generating departments, whose cost details for a typical quarter are presented below: Support Departments $ 290,500 ort 724,000 206,250 Support venue-Generating Departments 883,500 ry 635,000 advisory 803,400 $3,542,650 cost allocation system is designed as follows: (1) the support department costs are allocated to the three revenue- departments, and (2) the revenue-generating department costs are allocated to individual clients. The support department ocated to the revenue-generating departments as follows: (1) IT Support costs are allocated to Assurance, Tax Advisory, ss Advisory using a 30:30:40 ratio, (2) Admin Support costs are allocated using a 40:30:30 ratio, and (3) Facilities Support ocated using a 40:40:20 ratio. The costs accumulated in the three revenue-generating departments are allocated to ients based on the professional time consumed in the respective department. The Assurance, Tax Advisory, and Business partments recorded 10,500, 9,000, and 7,500 hours, respectively, for the quarter. the predetermined cost allocation rates for the three revenue-generating departments. (kound your answers to 2 decimal Predetermined Cost Allocation Rate visory

ng and Business Consultants provides a variety of consulting services to a diverse range of clients. The company has rt departments and three revenue-generating departments, whose cost details for a typical quarter are presented below: Support Departments $ 290,500 ort 724,000 206,250 Support venue-Generating Departments 883,500 ry 635,000 advisory 803,400 $3,542,650 cost allocation system is designed as follows: (1) the support department costs are allocated to the three revenue- departments, and (2) the revenue-generating department costs are allocated to individual clients. The support department ocated to the revenue-generating departments as follows: (1) IT Support costs are allocated to Assurance, Tax Advisory, ss Advisory using a 30:30:40 ratio, (2) Admin Support costs are allocated using a 40:30:30 ratio, and (3) Facilities Support ocated using a 40:40:20 ratio. The costs accumulated in the three revenue-generating departments are allocated to ients based on the professional time consumed in the respective department. The Assurance, Tax Advisory, and Business partments recorded 10,500, 9,000, and 7,500 hours, respectively, for the quarter. the predetermined cost allocation rates for the three revenue-generating departments. (kound your answers to 2 decimal Predetermined Cost Allocation Rate visory

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 2PA: Profit center responsibility reporting for a service company Red Line Railroad Inc. has three...
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KV Accounting and Business Consultants provides a variety of consulting services to a diverse range of clients. The company has three support departments and three revenue-generating departments, whose cost details for a typical quarter are presented below: Support Departments $ 290,500 IT Support Admin Support 724,000 206,250 Facilities Support Revenue-Generating Departments Assurance 883,500 Tax Advisory 635,000 Business Advisory 803,400 $3,542,650 The existing cost allocation system is designed as follows: (1) the support department costs are allocated to the three revenue- generating departments, and (2) the revenue-generating department costs are allocated to individual clients. The support department costs are allocated to the revenue-generating departments as follows: (1) IT Support costs are allocated to Assurance, Tax Advisory, and Business Advisory using a 30:30:40 ratio, (2) Admin Support costs are allocated using a 40:30:30 ratio, and (3) Facilities Support costs are allocated using a 40:40:20 ratio. The costs accumulated in the three revenue-generating departments are allocated to individual clients based on the professional time consumed in the respective department. The Assurance, Tax Advisory, and Business Advisory departments recorded 10,500, 9,000, and 7,500 hours, respectively, for the quarter. Required: 1. Compute the predetermined cost allocation rates for the three revenue-generating departments. (ound your answers to 2 decimal places.) Predetermined Cost Allocation Rate Assurance Tax Advisory Business Advisory
Transcribed Image Text:KV Accounting and Business Consultants provides a variety of consulting services to a diverse range of clients. The company has three support departments and three revenue-generating departments, whose cost details for a typical quarter are presented below: Support Departments $ 290,500 IT Support Admin Support 724,000 206,250 Facilities Support Revenue-Generating Departments Assurance 883,500 Tax Advisory 635,000 Business Advisory 803,400 $3,542,650 The existing cost allocation system is designed as follows: (1) the support department costs are allocated to the three revenue- generating departments, and (2) the revenue-generating department costs are allocated to individual clients. The support department costs are allocated to the revenue-generating departments as follows: (1) IT Support costs are allocated to Assurance, Tax Advisory, and Business Advisory using a 30:30:40 ratio, (2) Admin Support costs are allocated using a 40:30:30 ratio, and (3) Facilities Support costs are allocated using a 40:40:20 ratio. The costs accumulated in the three revenue-generating departments are allocated to individual clients based on the professional time consumed in the respective department. The Assurance, Tax Advisory, and Business Advisory departments recorded 10,500, 9,000, and 7,500 hours, respectively, for the quarter. Required: 1. Compute the predetermined cost allocation rates for the three revenue-generating departments. (ound your answers to 2 decimal places.) Predetermined Cost Allocation Rate Assurance Tax Advisory Business Advisory
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