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As the managing partner of Whispering 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 Support Departments HR $105,000 Billing $59,000 2 100 2 200 IT $87,000 1 200 Audit Operating Divisions $521,000 2,000 12 900 Advisory $865,000 $338,000 Tax 1,400 15 600 600 3 300 Totals $1,975,000 4,000 35 2,300

As the managing partner of Whispering 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 Support Departments HR $105,000 Billing $59,000 2 100 2 200 IT $87,000 1 200 Audit Operating Divisions $521,000 2,000 12 900 Advisory $865,000 $338,000 Tax 1,400 15 600 600 3 300 Totals $1,975,000 4,000 35 2,300

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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Rank the three support departments based on the percentage of their service provided to other support departments, and then allocate their costs using the step method. (Round intermediate calculations to 4 decimal places, eg. 15.2516 and final answers to 2 decimal places, e.g. 15.25.) $ Audit Tax $ Advisory Total
Transcribed Image Text:Rank the three support departments based on the percentage of their service provided to other support departments, and then allocate their costs using the step method. (Round intermediate calculations to 4 decimal places, eg. 15.2516 and final answers to 2 decimal places, e.g. 15.25.) $ Audit Tax $ Advisory Total
As the managing partner of Whispering 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 Support Departments Billing $59,000 ~ 2 100 HR $105,000 2 200 IT $87,000 1 200 Audit Operating Divisions $521,000 2,000 12 900 Tax $865,000 1,400 15 600 Advisory $338,000 600 3 300 Totals $1,975,000 4.000 35 2.300
Transcribed Image Text:As the managing partner of Whispering 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 Support Departments Billing $59,000 ~ 2 100 HR $105,000 2 200 IT $87,000 1 200 Audit Operating Divisions $521,000 2,000 12 900 Tax $865,000 1,400 15 600 Advisory $338,000 600 3 300 Totals $1,975,000 4.000 35 2.300
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