Q₁ Raspberries R Us has two operating units (Jam and Jelly) and two support departments (HR and Accounting). The estimated operating costs and percentages of services used by these departments are as follows: HR Accounting Jam Jelly HR 0% 10% 60% 30% Accounting 10% 0% 40% 50% Operating Costs $9,000 13,500 40,000 35,000 Instructions a. Allocate the support department costs to the operating units using the direct method of allocating costs. b. Allocate the support department costs to the operating units using the step method of allocating costs. The departments are ranked based on the highest costs. c. Which of the two methods would you recommend for Raspberries R Us and why?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Q₁
Raspberries R Us has two operating units (Jam and Jelly) and two support departments (HR
and Accounting). The estimated operating costs and percentages of services used by these
departments are as follows:
HR
Accounting
Jam
Jelly
HR
0%
10%
60%
30%
Accounting
10%
0%
40%
50%
Operating
Costs
$9,000
13,500
40,000
35,000
Instructions
a. Allocate the support department costs to the operating units using the direct method of
allocating costs.
b. Allocate the support department costs to the operating units using the step method of
allocating costs. The departments are ranked based on the highest costs.
c. Which of the two methods would you recommend for Raspberries R Us and why?
Transcribed Image Text:Q₁ Raspberries R Us has two operating units (Jam and Jelly) and two support departments (HR and Accounting). The estimated operating costs and percentages of services used by these departments are as follows: HR Accounting Jam Jelly HR 0% 10% 60% 30% Accounting 10% 0% 40% 50% Operating Costs $9,000 13,500 40,000 35,000 Instructions a. Allocate the support department costs to the operating units using the direct method of allocating costs. b. Allocate the support department costs to the operating units using the step method of allocating costs. The departments are ranked based on the highest costs. c. Which of the two methods would you recommend for Raspberries R Us and why?
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