Allocation of Support Departments Western Sales, Eastern Sales, and International Sales are profit centers for XYZ...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Allocation of Support Departments Western Sales, Eastern Sales, and International Sales are profit centers for XYZ Company. Human Resources, Information Systems, and Maintenance are support departments, and each is a cost center. Management has chosen to allocate support department costs to the profit centers. 1. For each support department, choose an appropriate allocation base from the Potential Allocation Bases and allocate the costs of those departments to the profit centers. Each profit center is to receive some of the cost of each of the support departments. Use the direct method of allocation. Use the space provided below to accomplish the allocation. 2. Calculate Operating Income, after allocation, for each of the profit centers. 3. In the text box below the worksheet, justify your choice of allocation base for each service department. Describe which of the general allocation criteria guided your choice of allocation base for each service department. Potential Allocation Bases Number of employees Number of computers used Hours of computer processing time used Computer network storage space used by each dept. (gigabytes) Square feet of space used by each dept. Total hours per month employees use social media, shopping sites, etc. for personal purposes. (IT Services can monitor this.) Revenues Direct Departmental Costs Departmental Margin Western Sales Eastern Sales 42 21 25 15 2,000 1,000 56 45 4,000 6,000 $ 210 1,500,000 $ 147 850,000 $ 998,000 $490,000 $ 502,000 $ 360,000 Allocation Worksheet Department Revenues Direct Costs Departmental Margin Allocation of HR Allocation of IS Allocation of Maintenance Operating Income Resources Human Information systems Maintenance Western Sales Eastern Sales ### ### $ $ 150,000 $ 998,000 1,500,000 $ 850,000 $490,000 $ 502,000 $360,000 Justify the allocation bases you used for each of the service departments: Allocation of Support Departments Western Sales, Eastern Sales, and International Sales are profit centers for XYZ Company. Human Resources, Information Systems, and Maintenance are support departments, and each is a cost center. Management has chosen to allocate support department costs to the profit centers. 1. For each support department, choose an appropriate allocation base from the Potential Allocation Bases and allocate the costs of those departments to the profit centers. Each profit center is to receive some of the cost of each of the support departments. Use the direct method of allocation. Use the space provided below to accomplish the allocation. 2. Calculate Operating Income, after allocation, for each of the profit centers. 3. In the text box below the worksheet, justify your choice of allocation base for each service department. Describe which of the general allocation criteria guided your choice of allocation base for each service department. Potential Allocation Bases Number of employees Number of computers used Hours of computer processing time used Computer network storage space used by each dept. (gigabytes) Square feet of space used by each dept. Total hours per month employees use social media, shopping sites, etc. for personal purposes. (IT Services can monitor this.) Revenues Direct Departmental Costs Departmental Margin Western Sales Eastern Sales 42 21 25 15 2,000 1,000 56 45 4,000 6,000 $ 210 1,500,000 $ 147 850,000 $ 998,000 $490,000 $ 502,000 $ 360,000 Allocation Worksheet Department Revenues Direct Costs Departmental Margin Allocation of HR Allocation of IS Allocation of Maintenance Operating Income Resources Human Information systems Maintenance Western Sales Eastern Sales ### ### $ $ 150,000 $ 998,000 1,500,000 $ 850,000 $490,000 $ 502,000 $360,000 Justify the allocation bases you used for each of the service departments:
Expert Answer:
Answer rating: 100% (QA)
Okay lets go through the stepbystep calculation to allocate the support department costs to the profit centers using the direct method Given informati... View the full answer
Related Book For
Accounting for Decision Making and Control
ISBN: 978-0078025747
8th edition
Authors: Jerold Zimmerman
Posted Date:
Students also viewed these accounting questions
-
Expected demand (mean) = 20,000 units Probability range for demand = 10,000 units to 30,000 units (95% probability) To approximate a normal distribution, we can use the mean and standard deviation....
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
For the attractive-nuisance doctrine to apply, the possessor need not be aware that children are likely to trespass on his land or have reason to know that the condition poses an unreasonable risk of...
-
Industrial Belting sells goods on account for 700,000 Mexican pesos. The foreign-exchange rate for a peso is $0,092 on the date of sale. Industrial Belting then collects cash on April 24 when the...
-
A domestic boiler heating system is heating the outside air at 5 C up to 20 C with 80 percent first law efficiency. Determine the second law efficiency of this system. Draw the corresponding Sankey...
-
Determine which of the following numbers are prime: \(\{31,97,188,389\}\)
-
Tyrene Products manufactures recreational equipment. One of the companys products, a skateboard, sells for $37.50. The skateboards are manufactured in an antiquated plant that relies heavily on...
-
Exercise 14-15 (Algo) Schedule of cost of goods manufactured and cost of goods sold LO P2 Beck Manufacturing reports the following information in T-accounts for the current year. d Beginning...
-
One way to see whether this procedure will be successful is to split the original data set into two subsets: one subset for estimation and one subset for validation. A regression equation is...
-
dge Check Question 3 (0.4 points) Teachers use an agenda to address six critical learning elements and structures in a Learning Map during which stage? Management Stage Planning Stage Implementation...
-
Summarize the six principles of Word-Of-Mouth (WOM) marketing . For each principle, explain what it means and why it works and then provide an example of how to use it for marketing purposes
-
If the goods intended to be transferred to a number of purchasers have been set aside for them, but their proportions have not specifically been identified: a.property in the goods passes to them if...
-
Kilimanjaro Company produces joint products Burigit, Ipot and Tubol, and by-products Brownish and Yellowis which have a joint cost of P1,287,300. Cost are assigned to joint products by Approximated...
-
In a video store, a DVD that sells for $15 is marked, "10% off". What is the discount? What is the sale price of the DVD? Solution: The rate is 10%. The discount is: 0.10 x $15.00 = $1.50 The sale...
-
1) According to the article, what are advantages of Time Driven ABC compared to Rate Based ABC? 2) What are the general disadvantages of Time-Driven ABC? 3) Please give review the Time-Driven ABC...
-
Tutorial 4: Topic 4 - Capital Budgeting 1. Bonson Publishing Company is considering two mutually exclusive investments, Projects X and Y. You are a finance analyst of the company and your director of...
-
You are maintaining a subsidiary ledger account for Police-Training Expenditures for 2013. The following columns are used: Inventory purchases are initially recorded as expenditures. Record the...
-
A new pharmaceutical drug calls for 4.5 ounces of compound AN7- X1 per batch of 250 tablets. AN7- X1 has a standard price of $ 2 per ounce. An initial inventory of 8,000 ounces of AN7- X1 is...
-
Darien Industries operates a cafeteria for its employees. The operation of the cafeteria requires fixed costs of $ 4,700 per month and variable costs of 40 percent of sales. Cafeteria sales are...
-
Simple Plant manufactures DNA test strips. Manufacturing overhead is applied to units produced using direct labor dollars as the allocation base. The overhead rate is calculated prior to the...
-
Calculate \(\frac{124}{297}+\frac{3}{125}\).
-
Express \(\frac{252}{840}\) in lowest terms.
-
Calculate \(\frac{21}{40}-\frac{8}{40}\).
Study smarter with the SolutionInn App