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Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows: Number of IS service tickets Number of employees Square footage occupied IS 170 Personnel 200 Administration Residential Commercial 155 1,410 115 3,900 120 8,000 107 3,800 138 16,100 940 162 69,500 The costs of the service departments and the allocation basis for each department follow. Department Direct Cost Allocation Base Information Systems (IS) $ 33,000 Personnel 40,000 IS service tickets Employees Administration 36,700 Square footage occupied Required: a. Assume that the company allocates service department costs to production departments using the direct method. What amount of Information Systems (IS) Department costs will be allocated to the Commercial Department? b. Assume the same method of allocation as in requirement (a). What amount of Personnel Department costs is allocated to the Residential Department? c. Assuming that the company allocates service department costs to other departments using the step method (starting with Administration and then IS), what amount of Administration Department costs is allocated to the IS Department? d. Assume the same method of allocation as in requirement (c). What amount of IS Department costs is allocated to Administration? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Assume the same method of allocation as in requirement (a). What amount of Personnel Department costs is allocated to the Residential Department? Note: Do not round intermediate calculations. Amount < Required A Required C >

Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows: Number of IS service tickets Number of employees Square footage occupied IS 170 Personnel 200 Administration Residential Commercial 155 1,410 115 3,900 120 8,000 107 3,800 138 16,100 940 162 69,500 The costs of the service departments and the allocation basis for each department follow. Department Direct Cost Allocation Base Information Systems (IS) $ 33,000 Personnel 40,000 IS service tickets Employees Administration 36,700 Square footage occupied Required: a. Assume that the company allocates service department costs to production departments using the direct method. What amount of Information Systems (IS) Department costs will be allocated to the Commercial Department? b. Assume the same method of allocation as in requirement (a). What amount of Personnel Department costs is allocated to the Residential Department? c. Assuming that the company allocates service department costs to other departments using the step method (starting with Administration and then IS), what amount of Administration Department costs is allocated to the IS Department? d. Assume the same method of allocation as in requirement (c). What amount of IS Department costs is allocated to Administration? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Assume the same method of allocation as in requirement (a). What amount of Personnel Department costs is allocated to the Residential Department? Note: Do not round intermediate calculations. Amount < Required A Required C >

Cornerstones of Cost Management (Cornerstones Series)
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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Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows: Number of IS service tickets Number of employees Square footage occupied IS 170 Personnel 200 Administration Residential Commercial 155 1,410 115 3,900 120 8,000 107 3,800 138 16,100 940 162 69,500 The costs of the service departments and the allocation basis for each department follow. Department Direct Cost Allocation Base Information Systems (IS) $ 33,000 Personnel 40,000 IS service tickets Employees Administration 36,700 Square footage occupied Required: a. Assume that the company allocates service department costs to production departments using the direct method. What amount of Information Systems (IS) Department costs will be allocated to the Commercial Department? b. Assume the same method of allocation as in requirement (a). What amount of Personnel Department costs is allocated to the Residential Department? c. Assuming that the company allocates service department costs to other departments using the step method (starting with Administration and then IS), what amount of Administration Department costs is allocated to the IS Department? d. Assume the same method of allocation as in requirement (c). What amount of IS Department costs is allocated to Administration? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Assume the same method of allocation as in requirement (a). What amount of Personnel Department costs is allocated to the Residential Department? Note: Do not round intermediate calculations. Amount < Required A Required C >
Transcribed Image Text:Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows: Number of IS service tickets Number of employees Square footage occupied IS 170 Personnel 200 Administration Residential Commercial 155 1,410 115 3,900 120 8,000 107 3,800 138 16,100 940 162 69,500 The costs of the service departments and the allocation basis for each department follow. Department Direct Cost Allocation Base Information Systems (IS) $ 33,000 Personnel 40,000 IS service tickets Employees Administration 36,700 Square footage occupied Required: a. Assume that the company allocates service department costs to production departments using the direct method. What amount of Information Systems (IS) Department costs will be allocated to the Commercial Department? b. Assume the same method of allocation as in requirement (a). What amount of Personnel Department costs is allocated to the Residential Department? c. Assuming that the company allocates service department costs to other departments using the step method (starting with Administration and then IS), what amount of Administration Department costs is allocated to the IS Department? d. Assume the same method of allocation as in requirement (c). What amount of IS Department costs is allocated to Administration? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Assume the same method of allocation as in requirement (a). What amount of Personnel Department costs is allocated to the Residential Department? Note: Do not round intermediate calculations. Amount < Required A Required C >
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