Barfield Corporation prepares business plans and marketing analyses for start-up companies in the Cleveland area. Barfield has been very successful in recent years in providing effective service to a growing number of clients. The company provides its service from a single office building in Cleveland and is organized into two main client-service groups: one for market research and the other for financial analysis. The two groups have budgeted annual costs of $440,000 and $810,000, respectively. In addition, Barfield has a support staff that is organized into two main functions: one for clerical, facilities, and logistical support (called the CFL group) and another for computer-related support. The CFL group has budgeted annual costs of $216,000, while the annual costs of the computer group are $654,000. Tom Brady, CFO of Barfield, plans to prepare a departmental cost allocation for his four groups, and he assembles the following information: Percentage of estimated dollars of work and time by CFL group: 10%-service to the computer group 20%-service to market research 70%-service to financial analysis Percentage of estimated dollars of work and time by the computer group: 20%-service to the CFL group 40%-service to market research 40%-service to financial analysis Required: Determine the total cost in the financial analysis and market research groups, after departmental allocation, using (a) the direct method, (b) the step method when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest dollar.) a. The direct method b. The step method c. The reciprocal method Market Research Financial Analysis $ $ $ Total Cost 0 0 0
Barfield Corporation prepares business plans and marketing analyses for start-up companies in the Cleveland area. Barfield has been very successful in recent years in providing effective service to a growing number of clients. The company provides its service from a single office building in Cleveland and is organized into two main client-service groups: one for market research and the other for financial analysis. The two groups have budgeted annual costs of $440,000 and $810,000, respectively. In addition, Barfield has a support staff that is organized into two main functions: one for clerical, facilities, and logistical support (called the CFL group) and another for computer-related support. The CFL group has budgeted annual costs of $216,000, while the annual costs of the computer group are $654,000. Tom Brady, CFO of Barfield, plans to prepare a departmental cost allocation for his four groups, and he assembles the following information: Percentage of estimated dollars of work and time by CFL group: 10%-service to the computer group 20%-service to market research 70%-service to financial analysis Percentage of estimated dollars of work and time by the computer group: 20%-service to the CFL group 40%-service to market research 40%-service to financial analysis Required: Determine the total cost in the financial analysis and market research groups, after departmental allocation, using (a) the direct method, (b) the step method when the sourcing department that provides the greatest percentage of services to other service departments goes first, and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest dollar.) a. The direct method b. The step method c. The reciprocal method Market Research Financial Analysis $ $ $ Total Cost 0 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Barfield Corporation prepares business plans and marketing analyses for start-up companies in the Cleveland area. Barfield has been
very successful in recent years in providing effective service to a growing number of clients. The company provides its service from a
single office building in Cleveland and is organized into two main client-service groups: one for market research and the other for
financial analysis. The two groups have budgeted annual costs of $440,000 and $810,000, respectively. In addition, Barfield has a
support staff that is organized into two main functions: one for clerical, facilities, and logistical support (called the CFL group) and
another for computer-related support. The CFL group has budgeted annual costs of $216,000, while the annual costs of the computer
group are $654,000.
Tom Brady, CFO of Barfield, plans to prepare a departmental cost allocation for his four groups, and he assembles the following
information:
Percentage of estimated dollars of work and time by CFL group:
10%-service to the computer group
20%-service to market research
70%-service to financial analysis
Percentage of estimated dollars of work and time by the computer group:
20%-service to the CFL group
40%-service to market research
40%-service to financial analysis
Required:
Determine the total cost in the financial analysis and market research groups, after departmental allocation, using (a) the direct
method, (b) the step method when the sourcing department that provides the greatest percentage of services to other service
departments goes first, and (c) the reciprocal method. (Do not round intermediate calculations. Round final answers to the nearest
dollar.)
a. The direct method
b. The step method
c. The reciprocal method
Market
Research
Financial
Analysis
69
69
Total Cost
0
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