Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating departments, organized according to the special Industry each department serves, are health care, retail, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Department Human Resources Billing Health Care 20 $ 900,000 Retail Legal Services Total Allocation Rate Complete this question by entering your answers in the tabs below. Req B2 Billing $ 2,310,000 Weight of Base *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Solomon adopts the direct method. The company uses the number of employees as the base for allocating the human resources department costs and department annual revenue as the base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. < Req A1 50 Req A1 Reg A2 Req B1 Req C1 Req C2 Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs. Allocated Cost $ S Health Care 0 0 0 $ 6,130,000 $ 10,300,000 0 0 203 Retail Req A2 > 153 $ 4,930,000 $ 5,550,000 Legal Services 94 $ 2,930,000 $ 4,150,000
Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating departments, organized according to the special Industry each department serves, are health care, retail, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Department Human Resources Billing Health Care 20 $ 900,000 Retail Legal Services Total Allocation Rate Complete this question by entering your answers in the tabs below. Req B2 Billing $ 2,310,000 Weight of Base *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Solomon adopts the direct method. The company uses the number of employees as the base for allocating the human resources department costs and department annual revenue as the base for allocating the billing department costs. c. Compute the total allocated cost of service centers for each operating department using each allocation method. < Req A1 50 Req A1 Reg A2 Req B1 Req C1 Req C2 Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses the number of employees as the base for allocating human resources department costs. Allocated Cost $ S Health Care 0 0 0 $ 6,130,000 $ 10,300,000 0 0 203 Retail Req A2 > 153 $ 4,930,000 $ 5,550,000 Legal Services 94 $ 2,930,000 $ 4,150,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Solomon Information Services, Incorporated, has two service departments: human resources and billing. Solomon's operating
departments, organized according to the special Industry each department serves, are health care, retall, and legal services. The
billing department supports only the three operating departments, but the human resources department supports all operating
departments and the billing department. Other relevant information follows.
Number of employees
Annual cost*
Annual revenue
Req A1
Department
Human Resources
Billing
Health Care
Retail
Req A2
Legal Services
Total
20
$ 900,000
Complete this question by entering your answers in the tabs below.
Allocation
Rate
Req B1
*This is the operating cost before allocating service department costs.
Required
a. Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company uses
the number of employees as the base for allocating human resources department costs and department annual revenue as the
base for allocating the billing department costs.
b. Allocate service department costs to operating departments, assuming that Solomon adopts the direct method. The company uses
the number of employees as the base for allocating the human resources department costs and department annual revenue as the
base for allocating the billing department costs.
c. Compute the total allocated cost of service centers for each operating department using each allocation method.
Req B2
Billing
Weight of
Base
=
$ 2,310,000
=
50
< Req A1
Allocate service department costs to operating departments, assuming that Solomon adopts the step method. The company
uses the number of employees as the base for allocating human resources department costs.
S
Health Care
203
Req C1
Allocated Cost
$
$ 6,130,000
$ 10,300,000
0
0
0
0
0
Retail
Reg C2
153
$ 4,930,000
$ 5,550,000
Legal Services
94
Req A2 >
$ 2,930,000
$ 4,150,000
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