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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 Human Resources Department Req A2 Billing Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Allocation Rate 20 $ 900,000 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. X X Req B2 Billing $ 2,310,000 Weight of Base 50 "1 HR < Reg A1 Health Care 203 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. $ 6,130,000 $ 10,300,000 Req C1 Allocated Cost Retail Req C2 153 $ 4,930,000 $ 5,550,000 Legal Services 94 Req A2 > $ 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, 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 Human Resources Department Req A2 Billing Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Allocation Rate 20 $ 900,000 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. X X Req B2 Billing $ 2,310,000 Weight of Base 50 "1 HR < Reg A1 Health Care 203 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. $ 6,130,000 $ 10,300,000 Req C1 Allocated Cost Retail Req C2 153 $ 4,930,000 $ 5,550,000 Legal Services 94 Req A2 > $ 2,930,000 $ 4,150,000

FINANCIAL ACCOUNTING
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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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 Human Resources Department Reg A2 Billing Health Care Retail Legal Services Total *This is the operating cost before allocating service department costs. Allocation Rate 20 Req B1 $ 900,000 Complete this question by entering your answers in the tabs below. x X Billing 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 50 $ 2,310,000 Weight of Base <Req A1 Health Care 203 Req C1 $ 6,130,000 $ 10,300,000 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 Req C2 Retail 153 $ 4,930,000 $ 5,550,000 Reg A2 > Legal Services 94 $ 2,930,000 $ 4,150,000
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 Human Resources Department Reg A2 Billing Health Care Retail Legal Services Total *This is the operating cost before allocating service department costs. Allocation Rate 20 Req B1 $ 900,000 Complete this question by entering your answers in the tabs below. x X Billing 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 50 $ 2,310,000 Weight of Base <Req A1 Health Care 203 Req C1 $ 6,130,000 $ 10,300,000 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 Req C2 Retail 153 $ 4,930,000 $ 5,550,000 Reg A2 > Legal Services 94 $ 2,930,000 $ 4,150,000
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