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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 1,600 1,600 4,800 Employees 16 0 24 40 Department direct costs $ 155,000 $ 265,400 $ 430,000 $ 390,000 Question: 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 1,600 1,600 4,800 Employees 16 0 24 40 Department direct costs $ 155,000 $ 265,400 $ 430,000 $ 390,000 Question: 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.

Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...
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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 1,600 1,600 4,800
Employees 16 0 24 40
Department direct costs $ 155,000 $ 265,400 $ 430,000 $ 390,000

Question:

Use the step method to allocate the service costs, using the following:

  1. The order of allocation starts with IT.

  2. The order of allocation starts with HR.

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