ng and Business Consultants provides a variety of consulting services to a diverse range of clients. The company has rt departments and three revenue-generating departments, whose cost details for a typical quarter are presented below: Support Departments $ 290,500 ort 724,000 206,250 Support venue-Generating Departments 883,500 ry 635,000 advisory 803,400 $3,542,650 cost allocation system is designed as follows: (1) the support department costs are allocated to the three revenue- departments, and (2) the revenue-generating department costs are allocated to individual clients. The support department ocated to the revenue-generating departments as follows: (1) IT Support costs are allocated to Assurance, Tax Advisory, ss Advisory using a 30:30:40 ratio, (2) Admin Support costs are allocated using a 40:30:30 ratio, and (3) Facilities Support ocated using a 40:40:20 ratio. The costs accumulated in the three revenue-generating departments are allocated to ients based on the professional time consumed in the respective department. The Assurance, Tax Advisory, and Business partments recorded 10,500, 9,000, and 7,500 hours, respectively, for the quarter. the predetermined cost allocation rates for the three revenue-generating departments. (kound your answers to 2 decimal Predetermined Cost Allocation Rate visory
ng and Business Consultants provides a variety of consulting services to a diverse range of clients. The company has rt departments and three revenue-generating departments, whose cost details for a typical quarter are presented below: Support Departments $ 290,500 ort 724,000 206,250 Support venue-Generating Departments 883,500 ry 635,000 advisory 803,400 $3,542,650 cost allocation system is designed as follows: (1) the support department costs are allocated to the three revenue- departments, and (2) the revenue-generating department costs are allocated to individual clients. The support department ocated to the revenue-generating departments as follows: (1) IT Support costs are allocated to Assurance, Tax Advisory, ss Advisory using a 30:30:40 ratio, (2) Admin Support costs are allocated using a 40:30:30 ratio, and (3) Facilities Support ocated using a 40:40:20 ratio. The costs accumulated in the three revenue-generating departments are allocated to ients based on the professional time consumed in the respective department. The Assurance, Tax Advisory, and Business partments recorded 10,500, 9,000, and 7,500 hours, respectively, for the quarter. the predetermined cost allocation rates for the three revenue-generating departments. (kound your answers to 2 decimal Predetermined Cost Allocation Rate visory
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:KV Accounting and Business Consultants provides a variety of consulting services to a diverse range of clients. The company has
three support departments and three revenue-generating departments, whose cost details for a typical quarter are presented below:
Support Departments
$ 290,500
IT Support
Admin Support
724,000
206,250
Facilities Support
Revenue-Generating Departments
Assurance
883,500
Tax Advisory
635,000
Business Advisory
803,400
$3,542,650
The existing cost allocation system is designed as follows: (1) the support department costs are allocated to the three revenue-
generating departments, and (2) the revenue-generating department costs are allocated to individual clients. The support department
costs are allocated to the revenue-generating departments as follows: (1) IT Support costs are allocated to Assurance, Tax Advisory,
and Business Advisory using a 30:30:40 ratio, (2) Admin Support costs are allocated using a 40:30:30 ratio, and (3) Facilities Support
costs are allocated using a 40:40:20 ratio. The costs accumulated in the three revenue-generating departments are allocated to
individual clients based on the professional time consumed in the respective department. The Assurance, Tax Advisory, and Business
Advisory departments recorded 10,500, 9,000, and 7,500 hours, respectively, for the quarter.
Required:
1. Compute the predetermined cost allocation rates for the three revenue-generating departments. (ound your answers to 2 decimal
places.)
Predetermined
Cost Allocation
Rate
Assurance
Tax Advisory
Business Advisory
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