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 *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 Health Care < Req C1 Retail $4,800,000 $9,000,000 $6,200,000 Compute the total allocated cost of service centers for each operating department using direct method. Total Allocated Human Resources Cost $ $ 80 Req C1 Req C2 0 0 0 0 60 Legal Services Req C2 40 $2,800,000 $4,800,000
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 *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 Health Care < Req C1 Retail $4,800,000 $9,000,000 $6,200,000 Compute the total allocated cost of service centers for each operating department using direct method. Total Allocated Human Resources Cost $ $ 80 Req C1 Req C2 0 0 0 0 60 Legal Services Req C2 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
*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
Health
Care
< Req C1
Retail
$4,800,000
$9,000,000 $6,200,000
Compute the total allocated cost of service centers for each operating department using direct method.
Total Allocated
Human
Resources
Cost
$
$
80
Req C1
Req C2
0
0
0
0
60
Legal
Services
Req C2
40
$2,800,000
$4,800,000
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