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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. Original cost Billing hours used Number of employees IT hours used (a) Total Support Departments Billing HR $63,000 $110,000 Audit 2 100 2 200 IT $102,000 1 200 Tax Operating Divisions Audit Tax $571.000 $808,000 2,000 Operating Departments 12 900 1.400 15 600 Advisory Totals $311.000 $1,965,000 4,000 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, eg 15.2516 and final answers to 2 decimal places, eg. 15.25.) Advisory 600 3 300 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. Original cost Billing hours used Number of employees IT hours used (a) Total Support Departments Billing HR $63,000 $110,000 Audit 2 100 2 200 IT $102,000 1 200 Tax Operating Divisions Audit Tax $571.000 $808,000 2,000 Operating Departments 12 900 1.400 15 600 Advisory Totals $311.000 $1,965,000 4,000 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, eg 15.2516 and final answers to 2 decimal places, eg. 15.25.) Advisory 600 3 300 35 2,300 Total

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 (a) Total Billing HR $63,000 $110,000 $ 2 Audit 100 2 200 $ IT $102,000 1 200 Operating Divisions Audit $571.000 $808,000 2,000 Operating Departments Tax 12 900 Tax $ 1.400 15 48 ode 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, eg 15.2516 and final answers to 2 decimal places, eg. 15.25.) Advisory $311.000 Advisory 600 3 300 Totals $1,965,000 4,000 35 2,300 Total
Transcribed Image Text: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 (a) Total Billing HR $63,000 $110,000 $ 2 Audit 100 2 200 $ IT $102,000 1 200 Operating Divisions Audit $571.000 $808,000 2,000 Operating Departments Tax 12 900 Tax $ 1.400 15 48 ode 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, eg 15.2516 and final answers to 2 decimal places, eg. 15.25.) Advisory $311.000 Advisory 600 3 300 Totals $1,965,000 4,000 35 2,300 Total
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