Homework: Chapter 15 Homework Score: 0 of 1 pt E15-19 (similar to) 1 of 4 (0 com
ID: 2564456 • Letter: H
Question
Homework: Chapter 15 Homework Score: 0 of 1 pt E15-19 (similar to) 1 of 4 (0 complete) HW Score: 0%, 0 of 4 pts Question Help * Houstin Partners provides management consulting services to government and corporate cients. Houstin has two support departments administrative services (AS) and information systems (IS)-and two operating departments govemment consulting (GOVT) and corporate consulting (CORP). For the first quarter of 2013, Houstin's cost records indicate the (Click the icon to view the cost records.) Read the recuirements Requirement 1a. Allocate the two support departments' costs to the two operating departments using the direct method. (Do not round interim calculations and round your final answers to the nearest whole dollar. Use parentheses or a minus sign when doreasing departments by allocating costs. Enter a .0. for any zero balances.) Support Departments Operating Departments Direct Mcthod AS IS GOVT CORP Total Budgeted overhead costs before intardepartment cost allocations Allocation of AS costs Allocation of IS costs Total budgeted overhead of operating departments Data Table Requirements SUPPORT OPERATING 1. Allocate the two support departments' costs to the two operating departments AS IS GOVT CORP Total using the following methods: a Direct methcd b. Step-down method (Allocate AS first) c. Step-down method (Allocate lS first) Compare and explain differences in the support-department costs allocated to each operating department Budgeted overhead costs before any interdepartment cost allocations S 330,000 S 1,200,000 S 8,650,000 S 12,490,000 S 22,670,000 Support work supplied by AS (budgeted head count) Support work supplied by IS budgeted computer time) 2. 25% 45% 30% 100% 3. What approaches might be used to decide the sequence in which to allocate support departments when using the step-down method? 10% 27% 63% 100%Explanation / Answer
2. As seen from the above, the costs allocated to the operating departments under all the three methods is different. Under the direct method, there is no allocation to other support departments but costs are directly allocated to the operating departments. While under the step-down method the department that goes first allocates its costs to the other support department and the operating departments. The support department going next then allocates its own costs plus the its share in the costs of the first support department to the operating departments.
3. In deciding the sequence in which to allocate the support department costs under the step-down method, the following approaches may be used:
Allocate support department costs based on a ranking of the percentage of their total services provided to other support departments.
Allocate support department costs based on a ranking of the total dollar amount of costs in the support departments.
Allocate support department costs on a ranking of the dollar amounts of service provided to other support departments
Support Departments Operating Departments 1.a. Direct Method AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations 330000 1200000 8650000 12490000 22670000 Allocation of AS costs -330000 198000 132000 Allocation of IS costs -1200000 360000 840000 Total budgeted overhead of operating departments 0 0 9208000 13462000 22670000 1.b. Support Departments Operating Departments Step-down method (Allocate AS first) AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations 330000 1200000 8650000 12490000 22670000 Allocation of AS costs -330000 82500 148500 99000 0 1282500 8798500 12589000 22670000 Allocation of IS costs -1282500 384750 897750 Total budgeted overhead of operating departments 0 0 9183250 13486750 22670000 1.c. Support Departments Operating Departments Step-down method (Allocate IS first) AS IS GOVT CORP Total Budgeted overhead costs before interdepartment cost allocations 330000 1200000 8650000 12490000 22670000 Allocation of IS costs 120000 -1200000 324000 756000 450000 0 8974000 13246000 22670000 Allocation of AS costs -450000 270000 180000 Total budgeted overhead of operating departments 0 0 9244000 13426000 22670000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.