Tuscaloosa National Bank has two service departments, the Human Resources (HR) D

Question

Tuscaloosa National Bank has two service departments, the Human Resources (HR) Department and the Computing Department. The bank has two other departments that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments’ output for the year is as follows:

The budgeted costs in the two service departments for the year are as follows:

User of Service Provider of Service HR Computing HR — 15 % Computing 10 % — Deposit 60 % 50 % Loan 30 % 35 % Required Use the step-down method to allocate the budgeted costs of the HR and Computing departments to the Deposit and Loan departments. Tuscaloosa National Bank allocates the costs of the HR Department first. (Do not round intermediate calculations.) Deposit Allocation of HR Department costs Allocation of Computing Department costs Total costs allocated to each department

Explanation / Answer

Allocation of Cost :

Deposit Loan Allocation of HR department costs 153000*60%=91800 153000*30%=45900 Allocation of Computing Department costs(229500+15300) 244800*50/85=144000 244800*35/85=100800 Total costs allocated to each department 235800 146700

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