School of Business and School of Education. Each of the operating departments uses the servicesof the company's two support departments: IT - Department and HR - Department. Additionally,the IT and HR departments use the services of each other. Data concerning the past year are asfollows: Support Departments Operating Department IT HR School of School of Department HR -Dept. Business Education Total Budgeted Overhead Cost before any $437,500 $375,120 $825,250 $956,330 $2,594,200 departmental cost allocation Support work furnished by IT - Dept.Budgeted IT Salaries 0 $20,000 $80,000 $100,000 $200,000 Percentage0 10.00% 40.00% 50.00% 100.00% Support work furnished by HR - Dept. Budgeted IT Servicehours 1250 0 3,000 2,000 6, 250 Percentage 20.00% 0 48.00 % 32.00 % 100.00% Directions: 1.What are the total overhead costs of the operating departments (Business and Education) afterthe support - department costs of the IT Dept. and Human Resource Dept. have been allocatedusing (a) the direct method, (b) the step-down method (allocate IT Department first), (c) thestep-down method (allocate Human Resource Department first), and (d) the reciprocal method?

The objective of the question is to calculate the total overhead costs of the operating departments…

Answered: School of Business and School of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Fact Pattern: The managers of Rochester Manufacturing are discussing ways to allocate the cost of service departments, such as Quality Control and Maintenance, to the production departments. To aid them in this discussion, the controller has provided the following information: Budgeted overhead costs before allocation Budgeted machine hours Budgeted direct labor hours Budgeted hours of service: Quality Control Quality Control $350,000 -- Maintenance Machining Assembly Total $200,000 $400,000 $300,000 $1,250,000 50,000 7,000 -- 25,000 50,000 25,000 21,000 7,000 35,000 Maintenance 10,000 18,000 12,000 40,000 Question: 31f Rochester uses the direct method of allocating service department costs, the total service costs allocated to the assembly department would be
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