information technology and operations. The support provided by information technology and opera- administration, and sales. These three operating departments are supported by two departments: tions to the other departments is shown below: Operating Departments Support Departments Claims Information Technology Operations Processing Administration Sales 20% 20% 40% Information 20% technology Operations 10 50 10% 30 The total costs incurred in the five departments are: Information technology Operations Claims processing $ 600,000 1,800,000 450,000 850,000 Administration 650,000 $4,350,000 Sales Total costs

information technology and operations. The support provided by information technology and opera- administration, and sales. These three operating departments are supported by two departments: tions to the other departments is shown below: Operating Departments Support Departments Claims Information Technology Operations Processing Administration Sales 20% 20% 40% Information 20% technology Operations 10 50 10% 30 The total costs incurred in the five departments are: Information technology Operations Claims processing $ 600,000 1,800,000 450,000 850,000 Administration 650,000 $4,350,000 Sales Total costs

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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Salsa has two service departments, the IT Department and HR Department. Salsa also has two production departments, the Cutting department and the Mixing Department. The usage of the two service departments’ output for the year is as follows: Provider of Service User of Service IT HR IT - 15 % HR 5 % - Cutting 45 % 25 % Mixing 50 % 60 % The budgeted costs in the two service departments for the year as follows: IT: $ 400,000 HR: $ 600,000 Use a.) direct method, b.) step-down method and c.) reciprocal services method to allocate the budgeted costs of the two service departments to production departments. Please donot provide solution in image format provide solution in step by step and fast solution
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