Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows: IS Personnel Administration Residential Commercial Number of IS service tickets 130 160 115 1,410 940 Number of employees 75 80 67 138 162 Square footage occupied 3,900 8,000 3,800 16,100 69,500 The costs of the service departments and the allocation basis for each department follow. Department Direct Cost Allocation Base Information Systems (IS) $ 25,000 IS service tickets Personnel 32,000 Employees Administration 28,700 Square footage occupied d. Assuming that the company allocates service department costs to other departments using the step method (starting with Administration and then IS), What amount of IS Department costs is allocated to Administration?
Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows: IS Personnel Administration Residential Commercial Number of IS service tickets 130 160 115 1,410 940 Number of employees 75 80 67 138 162 Square footage occupied 3,900 8,000 3,800 16,100 69,500 The costs of the service departments and the allocation basis for each department follow. Department Direct Cost Allocation Base Information Systems (IS) $ 25,000 IS service tickets Personnel 32,000 Employees Administration 28,700 Square footage occupied d. Assuming that the company allocates service department costs to other departments using the step method (starting with Administration and then IS), What amount of IS Department costs is allocated to Administration?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Western Services has three service departments: Information Systems (IS), Personnel, and Administration. There are two operating departments: Residential and Commercial. A summary of costs and other data for each department prior to allocation of service department costs for the latest period follows:
| IS | Personnel | Administration | Residential | Commercial | |
|---|---|---|---|---|---|
| Number of IS service tickets | 130 | 160 | 115 | 1,410 | 940 |
| Number of employees | 75 | 80 | 67 | 138 | 162 |
| Square footage occupied | 3,900 | 8,000 | 3,800 | 16,100 | 69,500 |
The costs of the service departments and the allocation basis for each department follow.
| Department | Direct Cost | Allocation Base |
|---|---|---|
| Information Systems (IS) | $ 25,000 | IS service tickets |
| Personnel | 32,000 | Employees |
| Administration | 28,700 | Square footage occupied |
d. Assuming that the company allocates service department costs to other departments using the step method (starting with Administration and then IS), What amount of IS Department costs is allocated to Administration?
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