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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
ll.2
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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