As the managing partner of Splish Accounting Services (HAS), Adam is trying to compare the profitability...
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As the managing partner of Splish Accounting Services (HAS), Adam is trying to compare the profitability results of the firm's three different business lines: Audit, Tax, and Advisory Services. These three operating divisions are supported by three support departments: Billing, Human Resources, and IT. The cost drivers (or allocation bases) for each of the support departments, along with each department's usage of those services and its own original costs, are as follows. Original cost Billing hours used Number of employees IT hours used Support Departments Billing $63,000 2 100 HR $121.000 2 200 IT $91,000 1 200 Audit Operating Divisions $558,000 $808,000 2,000 12 Tax 900 1,400 15 600 Advisory $321,000 $1,962,000 600 3 Totals 300 4,000 35 2,300 Rank the three support departments by their original costs, and then allocate the support department costs using the step method. (Round intermediate calculations to 4 decimal places, e.g. 15.2516 and final answers to 2 decimal places, e.g. 15.25.) (b) SA Audit $ Operating Departments Audit Tax Rank the three support departments based on the percentage of their service provided to other support departments, and then allocate their costs using the step method. (Round intermediate calculations to 4 decimal places, e.g. 15.2516 and final answers to 2 decimal places, e.g. 15.25.) Advisory Tax Total Advisory Total As the managing partner of Splish Accounting Services (HAS), Adam is trying to compare the profitability results of the firm's three different business lines: Audit, Tax, and Advisory Services. These three operating divisions are supported by three support departments: Billing, Human Resources, and IT. The cost drivers (or allocation bases) for each of the support departments, along with each department's usage of those services and its own original costs, are as follows. Original cost Billing hours used Number of employees IT hours used Support Departments Billing $63,000 2 100 HR $121.000 2 200 IT $91,000 1 200 Audit Operating Divisions $558,000 $808,000 2,000 12 Tax 900 1,400 15 600 Advisory $321,000 $1,962,000 600 3 Totals 300 4,000 35 2,300 Rank the three support departments by their original costs, and then allocate the support department costs using the step method. (Round intermediate calculations to 4 decimal places, e.g. 15.2516 and final answers to 2 decimal places, e.g. 15.25.) (b) SA Audit $ Operating Departments Audit Tax Rank the three support departments based on the percentage of their service provided to other support departments, and then allocate their costs using the step method. (Round intermediate calculations to 4 decimal places, e.g. 15.2516 and final answers to 2 decimal places, e.g. 15.25.) Advisory Tax Total Advisory Total
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To rank the three support departments by their original costs and allocate the support department costs using the step method we need to follow the steps below Step 1 Rank the support departments by t... View the full answer
Related Book For
Core Concepts of Accounting Information Systems
ISBN: 978-1118022306
12th edition
Authors: Mark G. Simkin, Jacob M. Rose, Carolyn S. Norman
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