Original cost Member Services hours Social Media hours Resource Deployment hours Admin. Services hours (a) Total S East Member Social Resource Admin. Services Media Deployment Services $20,300 $31,200 $39,300 $52,000 100 Support Departments 100 200 300 200 Central I I East Operating Segments Not available 600 500 400 500 West Central West Not available Not available 300 500 500 500 Using the direct method, allocate the support services costs to the operating segments, showing the total support costs that each operating segment will be accountable for as your final result. (Round a Operating Segments 500 400 600 400

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Whispering’s Market United (WMU) is an umbrella organization for all individuals who are go-getters in home-grown produce, homemade jams/jellies, artisan breads, and other hand-crafted items to be sold on local street corners. It represents a proud group of folks who are trying to keep the small producer and the health-conscious consumer top-of-mind when it comes to filling the refrigerator and pantry.

As a large organization that provides a variety of services for its regional member clubs, WMU continually strives to better understand its own profitability. WMU has four key support services to assist its members: Member Services, Social Media, Resource Deployment, and Administrative Services. These four support departments exist for the benefit of the three operating segments, which are organized geographically: East, Central, and West. While the support services primarily assist the operating segments, they also cross over and assist each other. The services offered by the support departments, along with the original cost of each support department, are as follows.

### Support and Operating Segments Cost Allocation

#### Table: Cost Distribution Across Support Departments and Operating Segments

| Support Departments       | Member Services | Social Media | Resource Deployment | Admin. Services | 
|---------------------------|-----------------|--------------|---------------------|----------------|
| **Original Cost**         | $20,300         | $31,200      | $39,300             | $52,000        |

|                           | **Operating Segments** |                  |                  |                  |
|---------------------------|------------------------|------------------|------------------|------------------|
|                           | **East**               | **Central**      | **West**         |
| **Member Services Hours** | -                      | 600              | 300              | 500              |
| **Social Media Hours**    | -                      | 500              | 500              | 500              |
| **Resource Deployment Hours** | -                  | 100              | 200              | 400              |
| **Admin. Services Hours** | -                      | 500              | 400              | 400              |

#### Cost Allocation Methods

**(a) Direct Method**

- **Description:** Allocate the support services costs directly to the operating segments (East, Central, West). This method requires calculating the total support costs that each segment will account for, based on the hours allocated.

- **Table for Results:**

  | Operating Segments | East       | Central    | West       |
  |--------------------|------------|------------|------------|
  | **Total**          | $          | $          | $          |

**(b) Reciprocal Method**

- **Description:** Employ the reciprocal method using Excel, which involves allocating support costs to operating segments while considering inter-departmental services. 

- **Table for Results:**

  | Operating Segments | East       | Central    | West       |
  |--------------------|------------|------------|------------|
  | **Total**          | $          | $          | $          |

#### Instructions:

- Use Excel to facilitate precise calculations.
- Follow the instructions and round all results to two decimal places for accuracy.
Transcribed Image Text:### Support and Operating Segments Cost Allocation #### Table: Cost Distribution Across Support Departments and Operating Segments | Support Departments | Member Services | Social Media | Resource Deployment | Admin. Services | |---------------------------|-----------------|--------------|---------------------|----------------| | **Original Cost** | $20,300 | $31,200 | $39,300 | $52,000 | | | **Operating Segments** | | | | |---------------------------|------------------------|------------------|------------------|------------------| | | **East** | **Central** | **West** | | **Member Services Hours** | - | 600 | 300 | 500 | | **Social Media Hours** | - | 500 | 500 | 500 | | **Resource Deployment Hours** | - | 100 | 200 | 400 | | **Admin. Services Hours** | - | 500 | 400 | 400 | #### Cost Allocation Methods **(a) Direct Method** - **Description:** Allocate the support services costs directly to the operating segments (East, Central, West). This method requires calculating the total support costs that each segment will account for, based on the hours allocated. - **Table for Results:** | Operating Segments | East | Central | West | |--------------------|------------|------------|------------| | **Total** | $ | $ | $ | **(b) Reciprocal Method** - **Description:** Employ the reciprocal method using Excel, which involves allocating support costs to operating segments while considering inter-departmental services. - **Table for Results:** | Operating Segments | East | Central | West | |--------------------|------------|------------|------------| | **Total** | $ | $ | $ | #### Instructions: - Use Excel to facilitate precise calculations. - Follow the instructions and round all results to two decimal places for accuracy.
Expert Solution
steps

Step by step

Solved in 4 steps with 8 images

Blurred answer
Knowledge Booster
Quality control
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education