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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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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