Question 5: Gold's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $150,000 are allocated based on the number of computer log-on hours. The costs of operating departments, Music and Books, are $250,000 and $300,000 respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Support Departments Production Departments Warehouse Department Data Center Department Music Books Budgeted costs $350,000 $150,000 $125,000 $150,000 Budgeted warehousehours NA 500 1,000 1,500 Number of computer hours 200 NA 800 1,000 Answer the following questions using the information below: a) Using the direct method, what amount of Warehouse Department costs will be allocated to both production departments - Music and Books? b) Using the direct method, what amount of Data Center Department costs will be allocated to both production departments – Music and Books? c) Using the step-down method, what amount of Data Center Department cost will be allocated to the Warehouse Department and the Music Department if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up) d) Using the step-down method, what amount of Warehouse Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)
Question 5:
Gold's Book and Music Store has two service departments, Warehouse and Data
Center. Warehouse Department costs of $350,000 are allocated on the basis of
budgeted warehouse-hours. Data Center Department costs of $150,000 are
allocated based on the number of computer log-on hours. The costs of operating
departments, Music and Books, are $250,000 and $300,000 respectively. Data
on budgeted warehouse-hours and number of computer log-on hours are as
follows:
Support Departments Production Departments
Warehouse
Department
Data Center
Department Music Books
Budgeted costs $350,000 $150,000 $125,000 $150,000
Budgeted warehousehours
NA 500 1,000 1,500
Number of computer
hours
200 NA 800 1,000
Answer the following questions using the information below:
a) Using the direct method, what amount of Warehouse Department costs will
be allocated to both production departments - Music and Books?
b) Using the direct method, what amount of Data Center Department costs will
be allocated to both production departments – Music and Books?
c) Using the step-down method, what amount of Data Center Department cost
will be allocated to the Warehouse Department and the Music Department if
the service department with the highest percentage of interdepartmental
support service is allocated first? (Round up)
d) Using the step-down method, what amount of Warehouse Department cost
will be allocated to Department Music if the service department with the
highest percentage of interdepartmental support service is allocated first?
(Round up)
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