Not-A-Mega Bank has three service departments (Administration, Communications, a

Question

Not-A-Mega Bank has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the year ended December 31 follows:

     The costs of the service departments are allocated on the following bases: Administration, employee hours; Communications, number of employees; and Facilities, square footage occupied. (Do not round your intermediate calculations. Round your answer to the nearest dollar amount.)

Assume that Not-A-Mega Bank elects to distribute service department costs directly to production departments using the direct method. What amount of Communications Department costs is allocated to the Deposits Department?

Assume the same method of allocation as in part (a). What amount of Administration Department costs is allocated to the Loans Department?

Assuming that Not-A-Mega Bank elects to distribute service department costs to other departments using the step method (starting with Facilities and then Communications), what amount of Facilities Department costs is allocated to the Communications Department?

Assume the same method of allocation as in part (c). What amount of Communication Department costs is allocated to Facilities

Not-A-Mega Bank has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the year ended December 31 follows:

Explanation / Answer

Not-A-Mega Bank Answer) a) Amount of communication department cost allocated to deposit department Communication Deposit Direct cost $470,000 $                            13,510,000.00 Employees 10 140 $            438,667 Ans b) Administerative Loan Direct cost $      290,000.00 $                              9,900,000.00 Employee hours 14500 216250 $            271,777 Ans © Administeration Communications Facilities Deposits Loans Direct cost $      290,000.00 $                                  470,000.00 $ 397,400.00 $ 13,510,000.00 $ 9,900,000.00 Square footage applied 3500 9500 4300 173000 150000 $        11,094.03 Ans (d) Once the cost has been allocated to other department it cannot be back.

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