Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT Accounting HR West East 0% 20% 40% 40% IT Accounting 0% HR 40% 60% 10% 10% 60% 20% The direct costs of the service departments in the previous period were $91,000 for IT, $116,000 for Accounting, and $155,000 for HR. Required: Use the step method to allocate the service department costs to the two production departments. Allocate HR costs first, followed by IT, and then Accounting. Note: Amounts to be deducted should be indicated by a minus sign. IT Accounting HR West East Service department costs HR allocation IT allocation Accounting allocation Total costs allocated 0% $ $ 0 0 $ 0 $ 0 $ 0

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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D3. 

Account 

 

Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production
departments (West and East). The usage data for each of the service departments for the previous period follow:
IT Accounting HR West East
0%
20% 40% 40%
IT
Accounting 0%
HR
--
10% 10%
--
Service department costs
HR allocation
IT allocation
The direct costs of the service departments in the previous period were $91,000 for IT, $116,000 for Accounting, and
$155,000 for HR.
Required:
Use the step method to allocate the service department costs to the two production departments. Allocate HR costs first,
followed by IT, and then Accounting.
Note: Amounts to be deducted should be indicated by a minus sign.
IT Accounting
HR West East
Accounting allocation
Total costs allocated
0%
so
$
eso
40% 60%
0 0
60% 20%
$
0
so
0
$
0
Transcribed Image Text:Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East). The usage data for each of the service departments for the previous period follow: IT Accounting HR West East 0% 20% 40% 40% IT Accounting 0% HR -- 10% 10% -- Service department costs HR allocation IT allocation The direct costs of the service departments in the previous period were $91,000 for IT, $116,000 for Accounting, and $155,000 for HR. Required: Use the step method to allocate the service department costs to the two production departments. Allocate HR costs first, followed by IT, and then Accounting. Note: Amounts to be deducted should be indicated by a minus sign. IT Accounting HR West East Accounting allocation Total costs allocated 0% so $ eso 40% 60% 0 0 60% 20% $ 0 so 0 $ 0
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