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Support-department cost allocations; direct, step-down, and reciprocal methods. Ballantine Corporation has two operating departments: Eastern Department and Western Department. Each of the operating departments uses the services of the company's two support departments: Engineering and Information Technology. Additionally, the Engineering and Information Technology departments use the services of each other. Data concerning the past year are as follows: Support Departments Information Engineering Technology Department Department $250,000 Operating Departments Eastern Western Total Budgeted overhead costs before any interdepartment cost allocations $300,000 $650,000 $920,000 $2,120,000 Support work furnished: By Engineering Budgeted Engineering salaries Percentage By Information Technology Budgeted IT service hours Percentage $60,000 $50,000 $90,000 $200,000 30% 25% 45% 100% 1,050 35% 450 1,500 3,000 15% 50% 100%

Support-department cost allocations; direct, step-down, and reciprocal methods. Ballantine Corporation has two operating departments: Eastern Department and Western Department. Each of the operating departments uses the services of the company's two support departments: Engineering and Information Technology. Additionally, the Engineering and Information Technology departments use the services of each other. Data concerning the past year are as follows: Support Departments Information Engineering Technology Department Department $250,000 Operating Departments Eastern Western Total Budgeted overhead costs before any interdepartment cost allocations $300,000 $650,000 $920,000 $2,120,000 Support work furnished: By Engineering Budgeted Engineering salaries Percentage By Information Technology Budgeted IT service hours Percentage $60,000 $50,000 $90,000 $200,000 30% 25% 45% 100% 1,050 35% 450 1,500 3,000 15% 50% 100%

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
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 10E: Support department cost allocation comparison Refer to your answers to Exercises 7-9. Compare the...
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Which method would you recommend that Ballantine Corporation use to allocate service-department costs? Why?

Support-department cost allocations; direct, step-down, and reciprocal methods. Ballantine Corporation has two operating departments: Eastern Department and Western Department. Each of the operating departments uses the services of the company's two support departments: Engineering and Information Technology. Additionally, the Engineering and Information Technology departments use the services of each other. Data concerning the past year are as follows: Support Departments Information Engineering Technology Department Department $250,000 Operating Departments Eastern Western Total Budgeted overhead costs before any interdepartment cost allocations $300,000 $650,000 $920,000 $2,120,000 Support work furnished: By Engineering Budgeted Engineering salaries Percentage By Information Technology Budgeted IT service hours Percentage $60,000 $50,000 $90,000 $200,000 30% 25% 45% 100% 1,050 35% 450 1,500 3,000 15% 50% 100%
Transcribed Image Text:Support-department cost allocations; direct, step-down, and reciprocal methods. Ballantine Corporation has two operating departments: Eastern Department and Western Department. Each of the operating departments uses the services of the company's two support departments: Engineering and Information Technology. Additionally, the Engineering and Information Technology departments use the services of each other. Data concerning the past year are as follows: Support Departments Information Engineering Technology Department Department $250,000 Operating Departments Eastern Western Total Budgeted overhead costs before any interdepartment cost allocations $300,000 $650,000 $920,000 $2,120,000 Support work furnished: By Engineering Budgeted Engineering salaries Percentage By Information Technology Budgeted IT service hours Percentage $60,000 $50,000 $90,000 $200,000 30% 25% 45% 100% 1,050 35% 450 1,500 3,000 15% 50% 100%
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