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?
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?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter5: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 1CMA
Related questions
Question
![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:
Department
Information Systems (IS)
Personnel
Administration
IS
170
115
3,900
Number of IS service tickets
Number of employees
Square footage occupied
The costs of the service departments and the allocation basis for each department follow.
Direct Cost
$ 33,000
40,000
36,700
Personnel
200
120
8,000
Administration Residential Commercial
155
1,410
107
138
3,800
16,100
Allocation Base
IS service tickets
Employees
Square footage occupied.
940
162
69,500
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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6ffa6552-fa2c-4a55-bf54-2ab773658d55%2F0cea897b-7463-495a-afa7-cc4bfba4dd3f%2Fbb31e27_processed.png&w=3840&q=75)
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:
Department
Information Systems (IS)
Personnel
Administration
IS
170
115
3,900
Number of IS service tickets
Number of employees
Square footage occupied
The costs of the service departments and the allocation basis for each department follow.
Direct Cost
$ 33,000
40,000
36,700
Personnel
200
120
8,000
Administration Residential Commercial
155
1,410
107
138
3,800
16,100
Allocation Base
IS service tickets
Employees
Square footage occupied.
940
162
69,500
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?
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VIEWStep 3: Allocate cost of personal department to residential department by direct method
VIEWStep 4: Allocating cost of service department to operating department by Step method
VIEWStep 5: Allocate cost of personal department to residential department by step method
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