Management at C. Pier Press has decided to allocate costs of the paper’s two support departments (administration and human resources) to the two revenue-generating departments (advertising and circulation). Administration costs are to be allocated on the basis of dollars of assets employed; human resources costs are to be allocated on the basis of number of employees. The following costs and allocation bases are available: Department Direct Costs Number of Employees Assets Employeed Administration $1,094,100 14 $541,940 Human resources 689,780 11 408,380 Advertising 1,340,920 17 1,067,360 Circulation 1,893,640 36 2,618,420 Totals $5,018,440 78 $4,636,100 a. Using the direct method, allocate the support department costs to the revenue-generating departments. Amount allocated to Advertising: $______ Amount allocated to Circulation: $______ b. Using your answer to (a), what are the total costs of the revenue-generating departments after the allocations? Advertising total costs $______ Circulation total costs$______ c. Assuming that the benefits-provided ranking is the order shown in the table, use the step method to allocate the support department costs to the revenue-generating departments.
Management at C. Pier Press has decided to allocate costs of the paper’s two support departments (administration and human resources) to the two revenue-generating departments (advertising and circulation). Administration costs are to be allocated on the basis of dollars of assets employed; human resources costs are to be allocated on the basis of number of employees. The following costs and allocation bases are available:
| Department | Direct Costs | Number of Employees | Assets Employeed |
| Administration | $1,094,100 | 14 | $541,940 |
| Human resources | 689,780 | 11 | 408,380 |
| Advertising | 1,340,920 | 17 | 1,067,360 |
| Circulation | 1,893,640 | 36 | 2,618,420 |
| Totals | $5,018,440 | 78 | $4,636,100 |
a. Using the direct method, allocate the support department costs to the revenue-generating departments.
Amount allocated to Advertising: $______
Amount allocated to Circulation: $______
b. Using your answer to (a), what are the total costs of the revenue-generating departments after the allocations?
Advertising total costs $______
Circulation total costs$______
c. Assuming that the benefits-provided ranking is the order shown in the table, use the step method to allocate the support department costs to the revenue-generating departments.
Amount allocated to Advertising: $______
Amount allocated to Circulation: $______
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