4.C. Salsa has three service departments, the Maintenance Department, the IT Department and HR Department. Salsa has also two production departments, the Cutting department and the Mixing Department. The usage of the three service departments' output for the year is as follows: Provider of Service User of Service Maintenance IT HR Maintenance 10 % 15 % IT HR 5 % Cutting 45 % 45% 30 % Mixing 55 % 40% 55 %

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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4.C. Salsa has three service departments, the Maintenance Department, the IT Department and HR Department.
Salsa has also two production departments, the Cutting department and the Mixing Department. The usage of the
three service departments' output for the year is as follows:
Provider of Service
User of Service
Maintenance
IT
HR
Maintenance
10 %
15 %
IT
HR
5%
Cutting
45 %
45%
30 %
Mixing
55 %
40%
55 %
The budgeted costs in the three service departments for the year as follows:
Maintenance: $ 120,000
IT: $ 300,000
HR: $ 150,000
Use step-down method to allocate the budgeted costs of the three service departments on production
departments.
Transcribed Image Text:4.C. Salsa has three service departments, the Maintenance Department, the IT Department and HR Department. Salsa has also two production departments, the Cutting department and the Mixing Department. The usage of the three service departments' output for the year is as follows: Provider of Service User of Service Maintenance IT HR Maintenance 10 % 15 % IT HR 5% Cutting 45 % 45% 30 % Mixing 55 % 40% 55 % The budgeted costs in the three service departments for the year as follows: Maintenance: $ 120,000 IT: $ 300,000 HR: $ 150,000 Use step-down method to allocate the budgeted costs of the three service departments on production departments.
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