As the managing partner of Marigold Accounting Services (HAS), Adam is trying to compare the profitability results of the firm's three different business lines: Audit, Tax, and Advisory Services. These three operating divisions are supported by three support departments: Billing. Human Resources, and IT. The cost drivers (or allocation bases) for each of the support departments, along with each department's usage of those services and its own original costs, are as follows. Support Departments Original cost Billing hours used Number of employees IT hours used Billing HR $63,000 $110,000 2 Audit 100 2 200 IT $102,000 1 200 Tax Operating Divisions Audit $571,000 Operating Departments Tax Advisory $808,000 $311,000 2,000 12 15 900 હત 1.400 600 Advisory 3 300 (a) Rank the three support departments by their original costs, and then allocate the support department costs using the step method. (Round intermediate calculations to 4 decimal places, es 15.2516 and final answers to 2 decimal places, e.g. 15.25.) Totals $1,965,000 4,000 35 2,300 Total
As the managing partner of Marigold Accounting Services (HAS), Adam is trying to compare the profitability results of the firm's three different business lines: Audit, Tax, and Advisory Services. These three operating divisions are supported by three support departments: Billing. Human Resources, and IT. The cost drivers (or allocation bases) for each of the support departments, along with each department's usage of those services and its own original costs, are as follows. Support Departments Original cost Billing hours used Number of employees IT hours used Billing HR $63,000 $110,000 2 Audit 100 2 200 IT $102,000 1 200 Tax Operating Divisions Audit $571,000 Operating Departments Tax Advisory $808,000 $311,000 2,000 12 15 900 હત 1.400 600 Advisory 3 300 (a) Rank the three support departments by their original costs, and then allocate the support department costs using the step method. (Round intermediate calculations to 4 decimal places, es 15.2516 and final answers to 2 decimal places, e.g. 15.25.) Totals $1,965,000 4,000 35 2,300 Total
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 8E: Rocky Mountain Airlines Inc. has two divisions organized as profit centers, the Passenger Division...
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