Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT HR Publishing Binding IT tickets 0 1,700 1,700 5,100 Employees 16 0 24 40 Department direct costs $ 156,000 $ 266,200 $ 430,000 $ 390,000 Required: Use the step method to allocate the service costs, using the following: The order of allocation starts with IT. The order of allocation starts with HR.
Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department. The following data appear in the company records for the current period: IT HR Publishing Binding IT tickets 0 1,700 1,700 5,100 Employees 16 0 24 40 Department direct costs $ 156,000 $ 266,200 $ 430,000 $ 390,000 Required: Use the step method to allocate the service costs, using the following: The order of allocation starts with IT. The order of allocation starts with HR.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Woodstock Binding has two service departments, IT (Information Technology) and HR (Human Resources), and two operating departments, Publishing and Binding. Management has decided to allocate IT costs on the basis of IT Tickets (issued with each IT request) in each department and HR costs on the basis of employees in each department.
The following data appear in the company records for the current period:
| IT | HR | Publishing | Binding | |
|---|---|---|---|---|
| IT tickets | 0 | 1,700 | 1,700 | 5,100 |
| Employees | 16 | 0 | 24 | 40 |
| Department direct costs | $ 156,000 | $ 266,200 | $ 430,000 | $ 390,000 |
Required:
Use the step method to allocate the service costs, using the following:
-
The order of allocation starts with IT.
-
The order of allocation starts with HR.
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