Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departmenorganized according to the special industry each department serves, are health care, retail, and legal services. The billing departsupports only the three operating departments, but the human resources department supports all operating departments and thbilling department. Other relevant information follows.Number of employeesAnnual cost*Annual revenueReq A1HumanResources10$720,000DepartmentReq A2Health CareRetailLegal ServicesTotalComplete this question by entering your answers in the tabs below.Req B1AllocationRate*This is the operating cost before allocating service department costs.Requireda. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The companythe number of employees as the base for allocating human resources department costs and department annual revenue as thbase for allocating the billing department costs.b. Allocate service department costs to operating departments, assuming that Compton adopts the direct method. The companythe number of employees as the base for allocating the human resources department costs and department annual revenue abase for allocating the billing department costs.c. Compute the total allocated cost of service centers for each operating department using each allocation method.XXBilling$1,428,000 $6,000,000X20XReq B2Weight ofBaseHealthCareAllocate service department costs to operating departments, assuming that Compton adopts the direct method. Thecompany uses the department annual revenue as the base for allocating the billing department costs. (Round "Allocationrate" to 4 decimal places.)==Retail$4,800,000$9,000,000 $6,200,000< Req B180$Req C1Allocated CostReq C2060Req C1LegalServices>40$2,800,000$4,800,000

Lets understand the basics. In step method of allocation, service department cost allocated to…

Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating depart organized according to the special industry each department serves, are health care, retail, and legal services. The billing de supports only the three operating departments, but the human resources department supports all operating departments an billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Human Resources 10 Health Care Billing $720,000 $1,428,000 $6,000,000 $9,000,000 20 80 *This is the operating cost before allocating service department costs. Retail $4,800,000 $6,200,000 60 Legal Services 40 $2,800,000 $4,800,000

Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating depart organized according to the special industry each department serves, are health care, retail, and legal services. The billing de supports only the three operating departments, but the human resources department supports all operating departments an billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Human Resources 10 Health Care Billing $720,000 $1,428,000 $6,000,000 $9,000,000 20 80 *This is the operating cost before allocating service department costs. Retail $4,800,000 $6,200,000 60 Legal Services 40 $2,800,000 $4,800,000

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departmen organized according to the special industry each department serves, are health care, retail, and legal services. The billing depart supports only the three operating departments, but the human resources department supports all operating departments and th billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Billing Human Resources 10 $720,000 $1,428,000 $6,000,000 Department Req A2 Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Req B1 Human Resources *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company the number of employees as the base for allocating human resources department costs and department…
Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departmen organized according to the special industry each department serves, are health care, retail, and legal services. The billing depart supports only the three operating departments, but the human resources department supports all operating departments and th billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Billing Human Resources 10 $720,000 $1,428,000 $6,000,000 Department Req A2 Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Req B1 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company the number of employees as the base for allocating human resources department costs and department annual revenue as…
Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departmen organized according to the special industry each department serves, are health care, retail, and legal services. The billing depart supports only the three operating departments, but the human resources department supports all operating departments and th billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Department Billing Human Resources 10 $720,000 $1,428,000 $6,000,000 Billing Health Care Retail Complete this question by entering your answers in the tabs below. Req A2 Legal Services Total *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company the number of employees as the base for allocating human resources department costs and department annual revenue as…
Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating departments, organized according to the special Industry each department serves, are health care, retall, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost Annual revenue Req A1 Human Resources Department Reg A2 Billing Health Care Retail Legal Services Total *This is the operating cost before allocating service department costs. Allocation Rate 20 Req B1 $ 900,000 Complete this question by entering your answers in the tabs below. x X Billing Required a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and…
Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating departments, organized according to the special Industry each department serves, are health care, retall, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Department Human Resources Billing Health Care Retail Req A2 Legal Services Total 20 $ 900,000 Complete this question by entering your answers in the tabs below. Allocation Rate Req B1 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department…
Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departments, organized according to the special industry each department serves, are health care, retail, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Health Legal Services Human Resources Billing Care Retail Number of employees 10 20 80 60 40 Annual cost* $720,000 $1,428,000 $6,000,000 $9,000,000 $4,800,000 $6,200,000 $2,800,000 $4,800,000 Annual revenue *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating…
Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departments, organized according to the special industry each department serves, are health care, retail, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Health Legal Services Human Resources Billing Care Retail Number of employees Annual cost* 10 20 80 60 40 $6,000,000 $9,000,000 $720,000 $1,428,000 $4,800,000 $6,200,000 $2,800,000 $4,800,000 Annual revenue *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating…
Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departments, organized according to the special industry each department serves, are health care, retail, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Human Health Legal Resources Billing Care Retail Services Number of employees 10 20 80 60 40 Annual cost* $4,800,000 $6,200,000 $720,000 $1,428,000 $6,000,000 $9,000,000 $2,800,000 $4,800,000 Annual revenue *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating…
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT tickets Employees Department direct costs From: Service department costs IT HR Total IT $ 0 16 $ 152,000 Required: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.) Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations. HR 1,525 0 $ 247,950 152,000 Answer is not complete. Cost Allocation To: IT HR 152,000 $ 247,950 Publishing 2,440 24 $ 431,000 $ 247,950 Publishing $ Binding 2,135 40 $ 392,500 0 Binding 0
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Baldwin Enterprises has two service departments, Personnel and Legal, and two operating divisions, Eastern and Western. Personnel costs are allocated on the basis of employees and Legal costs are allocated on the basis of hours. A summary of Baldwin operations follows: Employees Hours Department direct costs Costs Personnel Legal Complete this question by entering your answers in the tabs below. Total Personnel $ Personnel $ 10,800 $ 320,000 Required: a. Allocate the cost of the service departments to the operating divisions using the direct method. b. Allocate the cost of the service departments to the operating divisions using the step method. Start with Legal. c. Allocate the cost of the service departments to the operating divisions using the reciprocal method. 320,000 $ 320,000 $ Required A Required B Required C Allocate the cost of the service departments to the operating divisions using the reciprocal method. Note: Do not round intermediate calculations. Round your final answers…
Blue Spruce's Medical operates three support departments and two operating units, Surgery and ER. The support departments are allocated based on the hours used. The cost of operating the accounting (acct), administration (admin), and human resources (HR) departments is $273900, $161700, and $66600, respectively. Information on the hours used are as follows: Hours in Acct Hours in Admin Hours in HR Acct O $30204. O $28710. O $30417. O $0. 16 8 Admin HR 20 4 48 8 Surgery 360 120 65 ER 220 80 130 What amount of costs would be allocated from the accounting department to the other support departments (admin and HR) using the reciprocal method to allocate costs? (Do not round the intermediate calculations.)