Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 15, Problem 15.19E

Support-department cost allocation; direct and step-down methods. Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments—administrative services (AS) and information systems (IS)—and two operating departments—government consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2017, Phoenix’s cost records indicate the following:

Chapter 15, Problem 15.19E, Support-department cost allocation; direct and step-down methods. Phoenix Partners provides

  1. 1. Allocate the two support departments’ costs to the two operating departments using the following methods:

    Required

    1. a. Direct method
    2. b. Step-down method (allocate AS first)
    3. c. Step-down method (allocate IS first)
  2. 2. Compare and explain differences in the support-department costs allocated to each operating department.
  3. 3. What approaches might be used to decide the sequence in which to allocate support departments when using the step-down method?
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Support-department cost allocation; direct and step-down methods. Phoenix Partners provides management consulting services to government and corporate clients. Phoenix has two support departments—administrative services (AS) and information systems (IS)—and two operating departments— government consulting (GOVT) and corporate consulting (CORP). For the rst quarter of 2017, Phoenix’s cost records indicate the following:
Management at C. Pier Press has decided to allocate costs of the paper’s two support departments (administration and human resources) to the two revenue-generating departments (advertising and circulation). Administration costs are to be allocated on the basis of dollars of assets employed; human resources costs are to be allocated on the basis of number of employees. The following costs and allocation bases are available: Department Direct Costs Number of Employees Assets Employeed Administration $1,094,100 14 $541,940 Human resources 689,780 11 408,380 Advertising 1,340,920 17 1,067,360 Circulation 1,893,640 36 2,618,420 Totals $5,018,440 78 $4,636,100 a. Using the direct method, allocate the support department costs to the revenue-generating departments. Amount allocated to Advertising: $______ Amount allocated to Circulation: $______ b. Using your answer to (a), what are the total costs of the revenue-generating departments after the allocations? Advertising total…
Atlanta Partners provides management consulting services to government and corporate clients. Atlanta has two support departments—administrative services​ (AS) and information systems ​(IS)—and two operating departments—government consulting​ (GOVT) and corporate consulting​ (CORP). For the first quarter of 2017​, Atlanta's cost records indicate the​ following:     Read the requirements2.   Requirement 1a. Allocate the two support​ departments' costs to the two operating departments using the direct method. ​(Do not round intermediary calculations and round your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a​ "0" for any zero​ balances.)     Support Departments Operating Departments   Direct Method AS IS GOVT CORP Total Budgeted overhead costs           before interdepartment cost allocations           Allocation of AS costs…

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Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)

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