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BIUStar Company naS tWo service departments, Administration and Accounting, and two operating deparuments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting Domestic International Employees 27 53 20 Transactions 92,900 32,000 $364,000 23,000 $140,000 $940,000 $3,730,000 Department direct costs Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departmering the reciprocal method.

BIUStar Company naS tWo service departments, Administration and Accounting, and two operating deparuments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Administration Accounting Domestic International Employees 27 53 20 Transactions 92,900 32,000 $364,000 23,000 $140,000 $940,000 $3,730,000 Department direct costs Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departmering the reciprocal method.

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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BluStar Company has two service departments, Administration and Accounting, and twO operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations followS. Administration Accounting Domestic International Employees Transactions 27 53 20 23,000 92,000 32,00 $364, 00 Department direct costs $140,000 $940,000 $3,730,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. C. Allcate the cost of the service departments to the operating departmering the reciprocal method. Required A Required B Required C Allocate the cost of the service departments to the operating departments using the reciprocal method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your final answers to the nearest whole dollar amounts.) To From Administration Accounting Domestic International Department costs Administration allocation Accounting allocation Total cost 364,000 Os 140,000 Os 940,000 O s 3,730,000 O 364,000 $ 140,000 S 940,000 $ 3,730,000 < Required B Required C>
Transcribed Image Text:BluStar Company has two service departments, Administration and Accounting, and twO operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations followS. Administration Accounting Domestic International Employees Transactions 27 53 20 23,000 92,000 32,00 $364, 00 Department direct costs $140,000 $940,000 $3,730,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. C. Allcate the cost of the service departments to the operating departmering the reciprocal method. Required A Required B Required C Allocate the cost of the service departments to the operating departments using the reciprocal method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your final answers to the nearest whole dollar amounts.) To From Administration Accounting Domestic International Department costs Administration allocation Accounting allocation Total cost 364,000 Os 140,000 Os 940,000 O s 3,730,000 O 364,000 $ 140,000 S 940,000 $ 3,730,000 < Required B Required C>
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