Comprehensive support department allocationsManagement at C. Pier Press has decided to allocate costs of the paper’s two support departments (administration and human resources) to the two revenue-generating departments (advertising and circulation). Administration costs are to be allocated on the basis of dollars of assets employed; human resources costs are to be allocated on the basis of number of employees. The following costs and allocation bases are available:Department Direct CostsNumber of EmployeesAssets EmployedAdministration $1,094,10014$541,940Human resources 689,78011408,380Advertising 1,340,920171,067,360Circulation 1,893,640362,618,420Totals $5,018,44078$4,636,100 c. Assuming that the benefits-provided ranking is the order shown in the table, use the step method to allocate the support department costs to the revenue-generating departments.Note: Round your final answers only to the nearest whole dollar. Amount allocated to Advertising: $1,094,100 Amount allocated to Circulation: $ d. Using your answer to (c), what are the total costs of the revenue-generating departments after the allocations? Advertising total costs $ Circulation total costs $

Cost allocation is a process of allocating overhead cost of service department to the operating…

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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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Comprehensive support department allocations
Management at C. Pier Press has decided to allocate costs of the paper’s two support departments (administration and human resources) to the two revenue-generating departments (advertising and circulation). Administration costs are to be allocated on the basis of dollars of assets employed; human resources costs are to be allocated on the basis of number of employees. The following costs and allocation bases are available:

Department	Direct Costs	Number of Employees	Assets Employed
Administration	$1,094,100	14	$541,940
Human resources	689,780	11	408,380
Advertising	1,340,920	17	1,067,360
Circulation	1,893,640	36	2,618,420
Totals	$5,018,440	78	$4,636,100

c. Assuming that the benefits-provided ranking is the order shown in the table, use the step method to allocate the support department costs to the revenue-generating departments.
Note: Round your final answers only to the nearest whole dollar.

Amount allocated to Advertising: $1,094,100

Amount allocated to Circulation: $

d. Using your answer to (c), what are the total costs of the revenue-generating departments after the allocations?

Advertising total costs $

Circulation total costs $

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