nterdepartmental Services: Step Method O'Brian's Department Stores allocates the costs of the Personnel and Payroll departments to three retail sales departments, Housewares, Clothing, and Furniture. In addition to providing services to the operating departments, Personnel and Payroll provide services to each other. O'Brian's allocates Personnel Department costs on the basis of the number of employees and Payroll Department costs on the basis of gross payroll. Cost and allocation information for June is as follows: Personnel Payroll Housewares Clothing Furniture Direct department cost $ 7,800 $ 3,200 $ 12,200 $ 20,000 $ 16,750 Number of employees 5 4 8 16 4 Gross payroll $ 6,000 $ 3,300 $ 10,600 $ 17,400 $ 8,100 (a) Determine the percentage of total Personnel Department services that was provided to the Payroll Department. (Round your answer to one decimal place.) % (b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department. (Round your answer one decimal place.) % (c) Prepare a schedule showing Personnel Department and Payroll Department cost allocations to the operating departments, assuming O'Brian's uses the step method. For each department below, enter the total costs calculated from your schedule. Do not round until your final answers. Round answers to the nearest dollar. Service Departments Producing Departments Personnel Payroll Housewares Clothing Furniture Total costs $ $ $ $ $

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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Interdepartmental Services: Step Method

O'Brian's Department Stores allocates the costs of the Personnel and Payroll departments to three retail sales departments, Housewares, Clothing, and Furniture. In addition to providing services to the operating departments, Personnel and Payroll provide services to each other. O'Brian's allocates Personnel Department costs on the basis of the number of employees and Payroll Department costs on the basis of gross payroll. Cost and allocation information for June is as follows:

	Personnel	Payroll	Housewares	Clothing	Furniture
Direct department cost	$ 7,800	$ 3,200	$ 12,200	$ 20,000	$ 16,750
Number of employees	5	4	8	16	4
Gross payroll	$ 6,000	$ 3,300	$ 10,600	$ 17,400	$ 8,100

(a) Determine the percentage of total Personnel Department services that was provided to the Payroll Department. (Round your answer to one decimal place.)

(b) Determine the percentage of total Payroll Department services that was provided to the Personnel Department. (Round your answer one decimal place.)

(c) Prepare a schedule showing Personnel Department and Payroll Department cost allocations to the operating departments, assuming O'Brian's uses the step method.

For each department below, enter the total costs calculated from your schedule.

Do not round until your final answers. Round answers to the nearest dollar.

	Service Departments	Producing Departments
	Personnel	Payroll	Housewares	Clothing	Furniture
Total costs	$	$	$	$	$

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