(b)Allocate the support department costs using the step method to determine the total costs for which each operating departmentshould be accountable. Rank the support departments based on their original cost.Total$Operating DepartmentsWheelsWings$LATotal costs The Sunland Company makes wheels and wings for ground transport vehicles and drones. In addition to the key manufacturingdepartments, Sunland needs two key support services, provided by its Maintenance and IT departments.The Maintenance costs are allocated to other departments based on the square footage of space each department occupies. The ITdepartment allocates its costs to other departments based on the amount of time the IT employees spend assisting the otherdepartments. The cost information of all four departments, along with their usage information for both allocation bases, is as follows.Initial costSquare feet occupiedIT labor hours usedSupport DepartmentsMaintenanceIT$136,000 $75,0001,2002,000900Operating DepartmentsWheelsWings$413,000 $702,0002,4002,5655,6001,935Totals$1,326,00011,2005,400

Lets understand the basics.cost of service department can be allocated using,(1) Direct method(2)…

llocate the support department costs using the step method to determine the total costs for which each operating departm hould be accountable. Rank the support departments based on their original cost. Total $ Operating Departments Wheels $ Wings $ Total costs

llocate the support department costs using the step method to determine the total costs for which each operating departm hould be accountable. Rank the support departments based on their original cost. Total $ Operating Departments Wheels $ Wings $ 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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