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Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departm organized according to the special industry each department serves, are health care, retail, and legal services. The billing dep supports only the three operating departments, but the human resources department supports all operating departments and billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Human Resources 10 Billing $720,000 $1,428,000 Req A1 Req A2 20 Req B1 Health Care Complete this question by entering your answers in the tabs below. Retail $6,000,000 $4,800,000 $9,000,000 $6,200,000 Req B2 80 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The compan the number of employees as the base for allocating human resources department costs and department annual revenue as base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Compton adopts the direct method. The compa the number of employ as the base for allocat the human resources department costs and department annual revenu base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. Req C1 60 Req C2 Legal Services 40 $2,800,000 $4,800,000

Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departm organized according to the special industry each department serves, are health care, retail, and legal services. The billing dep supports only the three operating departments, but the human resources department supports all operating departments and billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Human Resources 10 Billing $720,000 $1,428,000 Req A1 Req A2 20 Req B1 Health Care Complete this question by entering your answers in the tabs below. Retail $6,000,000 $4,800,000 $9,000,000 $6,200,000 Req B2 80 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The compan the number of employees as the base for allocating human resources department costs and department annual revenue as base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Compton adopts the direct method. The compa the number of employ as the base for allocat the human resources department costs and department annual revenu base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. Req C1 60 Req C2 Legal Services 40 $2,800,000 $4,800,000

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...
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Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departmen organized according to the special industry each department serves, are health care, retail, and legal services. The billing depart supports only the three operating departments, but the human resources department supports all operating departments and th billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Billing Human Resources 10 $720,000 $1,428,000 $6,000,000 Department Req A2 Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Req B1 Human Resources *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company the number of employees as the base for allocating human resources department costs and department annual revenue as th base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Compton adopts the direct method. The company the number of employees as the base for allocating the human resources department costs and department annual revenue a base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. + + 20 + + Req B2 Billing Compute the total allocated cost of service centers for each operating department using step method. = Health Care < Req B2 Retail $4,800,000 $9,000,000 $6,200,000 $ 80 $ Req C1 Total Allocated Cost Req C2 0 0 0 0 60 Legal Services Req C2 > 40 $2,800,000 $4,800,000
Transcribed Image Text:Compton Information Services, Inc., has two service departments: human resources and billing. Compton's operating departmen organized according to the special industry each department serves, are health care, retail, and legal services. The billing depart supports only the three operating departments, but the human resources department supports all operating departments and th billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Req A1 Billing Human Resources 10 $720,000 $1,428,000 $6,000,000 Department Req A2 Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Req B1 Human Resources *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Compton adopts the step method. The company the number of employees as the base for allocating human resources department costs and department annual revenue as th base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Compton adopts the direct method. The company the number of employees as the base for allocating the human resources department costs and department annual revenue a base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. + + 20 + + Req B2 Billing Compute the total allocated cost of service centers for each operating department using step method. = Health Care < Req B2 Retail $4,800,000 $9,000,000 $6,200,000 $ 80 $ Req C1 Total Allocated Cost Req C2 0 0 0 0 60 Legal Services Req C2 > 40 $2,800,000 $4,800,000
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