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% Accounting HR 0% 10% 0% 10% 40% 40% 40% 60% 60% 20% The direct costs of the service departments in the previous period were $86,750 for IT, $99,000 for Accounting, and
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% Accounting HR 0% 10% 0% 10% 40% 40% 40% 60% 60% 20% The direct costs of the service departments in the previous period were $86,750 for IT, $99,000 for Accounting, and
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vikrambhai
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
IT
--
Accounting
0%
HR
West East
0%
10%
20%
0%
10%
40% 40%
40% 60%
60% 20%
The direct costs of the service departments in the previous period were $86,750 for IT, $99,000 for Accounting, and
$112,500 for HR.
Required:
Use the reciprocal method to allocate the service department costs to the production departments. (Matrix algebra is
not required.)
Note: Amounts to be deducted should be indicated by a minus sign. Do not round intermediate calculations.
> Answer is not complete.
Allocation
IT
Accounting
HR
Service department costs
$
86,750
$
99,000 $ 112,500 $
West
East
0
$
0
IT allocation
0
Accounting allocation
0
0
HR allocation
Total costs allocated
$
86,750
$
99,000
112,500
$
0
$
0
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