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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 IT Accounting 0% HR West East 20% 40% 40% Accounting 0% 0% 40% 60% HR 10% 10% -- 60% 20% The direct costs of the service departments in the previous period were $91,750 for IT, $119,000 for Accounting, and $162,500 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 $ 91,750 $ 119,000 $ 162,500 HR allocation 16,250 16,250 (162,500) 97,500 32,500 IT allocation (108,000) Accounting allocation Total costs allocated (135,250) $ 0 $ 81,150 97,500 S 113,650

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 IT Accounting 0% HR West East 20% 40% 40% Accounting 0% 0% 40% 60% HR 10% 10% -- 60% 20% The direct costs of the service departments in the previous period were $91,750 for IT, $119,000 for Accounting, and $162,500 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 $ 91,750 $ 119,000 $ 162,500 HR allocation 16,250 16,250 (162,500) 97,500 32,500 IT allocation (108,000) Accounting allocation Total costs allocated (135,250) $ 0 $ 81,150 97,500 S 113,650

FINANCIAL ACCOUNTING
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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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 IT -- Accounting 0% HR West East 20% 40% 40% Accounting HR 0% 10% -- 0% 40% 60% 10% 60% 20% The direct costs of the service departments in the previous period were $91,750 for IT, $119,000 for Accounting, and $162,500 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 $ 91,750 $ 119,000 S HR allocation IT allocation 16,250 (108,000) 16,250 162,500 (162.500) 97,500 32,500 Accounting allocation Total costs allocated (135.250) 81,150 S S S 97,500 S 113,650
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 IT -- Accounting 0% HR West East 20% 40% 40% Accounting HR 0% 10% -- 0% 40% 60% 10% 60% 20% The direct costs of the service departments in the previous period were $91,750 for IT, $119,000 for Accounting, and $162,500 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 $ 91,750 $ 119,000 S HR allocation IT allocation 16,250 (108,000) 16,250 162,500 (162.500) 97,500 32,500 Accounting allocation Total costs allocated (135.250) 81,150 S S S 97,500 S 113,650
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