Required:Rank the support departments based on the percentage of their services provided to other support departments. Use this ranking to allocate the support departments’ costs to the operating departments based on the step-down method. Question:3Dunlop Tyres, a Tyre manufacturer, has two operating departments- B2B and B2C-andtwo support departments-human resources and information systems. Each Operatingdepartment conducts merchandising and marketing operations independently. Dunlopuses number of employees to allocate human resources costs and processing time toallocate information systems costs. The following data are available for July 2021:SUPPORTOPERATINGDEPARTMENTSDEPARTΜΕNTSHumanInformationCorporate ConsumerResourcesSystemsSalesSalesBudgeted costs incurredbefore any interdepartmentcost allocations$500,000 $1,000,000$700,000$500,000Support work supplied byhuman resourcesdepartmentBudgeted number ofemployeesBudgeted processing time (inminutes)60150904502,2501,800

Particulars Support Department Support Department Operating Department Operating Department…

SUPPORT OPERATING DEPARTΜΕNTS DEPARTΜΕNTS Human Information Corporate Consumer Resources Systems Sales Sales Budgeted costs incurred before any interdepartment cost allocations Support work supplied by $500,000 $1,000,000 $700,000 $500,000 human resources department Budgeted number of employees Budgeted processing time (in minutes) 60 150 90 450 2,250 1,800

SUPPORT OPERATING DEPARTΜΕNTS DEPARTΜΕNTS Human Information Corporate Consumer Resources Systems Sales Sales Budgeted costs incurred before any interdepartment cost allocations Support work supplied by $500,000 $1,000,000 $700,000 $500,000 human resources department Budgeted number of employees Budgeted processing time (in minutes) 60 150 90 450 2,250 1,800

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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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Required:

Rank the support departments based on the percentage of their services provided to
other support departments. Use this ranking to allocate the support departments’
costs to the operating departments based on the step-down method.

Question:3
Dunlop Tyres, a Tyre manufacturer, has two operating departments- B2B and B2C-and
two support departments-human resources and information systems. Each Operating
department conducts merchandising and marketing operations independently. Dunlop
uses number of employees to allocate human resources costs and processing time to
allocate information systems costs. The following data are available for July 2021:
SUPPORT
OPERATING
DEPARTMENTS
DEPARTΜΕNTS
Human
Information
Corporate Consumer
Resources
Systems
Sales
Sales
Budgeted costs incurred
before any interdepartment
cost allocations
$500,000 $1,000,000
$700,000
$500,000
Support work supplied by
human resources
department
Budgeted number of
employees
Budgeted processing time (in
minutes)
60
150
90
450
2,250
1,800

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