EBK HORNGREN'S COST ACCOUNTING
16th Edition
ISBN: 9780134475998
Author: Rajan
Publisher: YUZU
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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:
- 1. Allocate the two support departments’ costs to the two operating departments using the following methods:
Required
- a. Direct method
- b. Step-down method (allocate AS first)
- c. Step-down method (allocate IS first)
- 2. Compare and explain differences in the support-department costs allocated to each operating department.
- 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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Atlanta Partners provides management consulting services to government and corporate clients. Atlanta has two support departments—administrative services (AS) and information systems (IS)—and
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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…
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:
Comprehensive support department allocations (Need answers for parts C, D, and E please. Thank you!)
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 Employed
Administration
$390,750
5
$193,550
Human resources
246,350
4
145,850
Advertising
478,900
6
381,200
Circulation
676,300
13
935,150
Totals
$1,792,300
28
$1,655,750
a. Using the direct method, allocate the support department costs to the revenue-generating departments.Note: Round percentages in your calculation to the nearest whole percent (for example, round 34.5% to 35%).Note:…
Chapter 15 Solutions
EBK HORNGREN'S COST ACCOUNTING
Ch. 15 - Prob. 15.1QCh. 15 - Describe how the dual-rate method is useful to...Ch. 15 - How do budgeted cost rates motivate the...Ch. 15 - Give examples of allocation bases used to allocate...Ch. 15 - Why might a manager prefer that budgeted rather...Ch. 15 - To ensure unbiased cost allocations, fixed costs...Ch. 15 - Prob. 15.7QCh. 15 - What is conceptually the most defensible method...Ch. 15 - Distinguish between two methods of allocating...Ch. 15 - What are the challenges of using the incremental...
Ch. 15 - Prob. 15.11QCh. 15 - What is one key way to reduce cost-allocation...Ch. 15 - Describe how companies are increasingly facing...Ch. 15 - Distinguish between the stand-alone and the...Ch. 15 - Identify and discuss arguments that individual...Ch. 15 - Single-rate versus dual-rate methods, support...Ch. 15 - Single-rate method, budgeted versus actual costs...Ch. 15 - Dual-rate method, budgeted versus actual costs and...Ch. 15 - Support-department cost allocation; direct and...Ch. 15 - Support-department cost allocation, reciprocal...Ch. 15 - Direct and step-down allocation. E-books, an...Ch. 15 - Reciprocal cost allocation (continuation of...Ch. 15 - Allocation of common costs. Evan and Brett are...Ch. 15 - Allocation of common costs. Gordon Grimes, a...Ch. 15 - Revenue allocation, bundled products. Couture Corp...Ch. 15 - Allocation of common costs. Jim Dandy Auto Sales...Ch. 15 - Single-rate, dual-rate, and practical capacity...Ch. 15 - Prob. 15.28PCh. 15 - Fixed-cost allocation. Central University...Ch. 15 - Allocating costs of support departments; step-down...Ch. 15 - Support-department cost allocations;...Ch. 15 - Common costs. Tate Inc. and Booth Inc. are two...Ch. 15 - Prob. 15.33PCh. 15 - Support-department cost allocations;...Ch. 15 - Revenue allocation, bundled products. Boca Resorts...Ch. 15 - Support-department cost allocations; direct,...
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