The University of the Bahamas has two operating departments: School of Business and School of Education....
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The University of the Bahamas has two operating departments: School of Business and School of Education. Each of the operating departments uses the services of the company's two support departments: IT-Department and HR- Department. Additionally, the IT and HR departments use the services of each other. Data concerning the past year are as follows: Budgeted Overhead Cost before any departmental cost allocation Support work furnished by IT-Dept. Budgeted IT Salaries Percentage Support work furnished by HR-Dept. Budgeted IT Service hours. Percentage Directions: Support Departments HR Department HR-Dept. $437,500 $375,120 IT 0 0 1250 20.00% $20,000 10.00% 0 Operating Department School of Business $825,250 $80,000 40.00% 3,000 48.00% School of Education Total $956,330 $2,594,200 $100,000 $200,000 50.00% 100.00% 2,000 6,250 32.00% 100.00% 1. What are the total overhead costs of the operating departments (Business and Education) after the support-department costs of the IT Dept, and Human Resource Dept. have been allocated using (a) the direct method, (b) the step-down method (allocate IT Department first), (e) the step-down method (allocate Human Resource Department first), and (d) the reciprocal method? 2. Which method would you recommend the University of Florida use to allocate service-department costs? Why? The University of the Bahamas has two operating departments: School of Business and School of Education. Each of the operating departments uses the services of the company's two support departments: IT-Department and HR- Department. Additionally, the IT and HR departments use the services of each other. Data concerning the past year are as follows: Budgeted Overhead Cost before any departmental cost allocation Support work furnished by IT-Dept. Budgeted IT Salaries Percentage Support work furnished by HR-Dept. Budgeted IT Service hours. Percentage Directions: Support Departments HR Department HR-Dept. $437,500 $375,120 IT 0 0 1250 20.00% $20,000 10.00% 0 Operating Department School of Business $825,250 $80,000 40.00% 3,000 48.00% School of Education Total $956,330 $2,594,200 $100,000 $200,000 50.00% 100.00% 2,000 6,250 32.00% 100.00% 1. What are the total overhead costs of the operating departments (Business and Education) after the support-department costs of the IT Dept, and Human Resource Dept. have been allocated using (a) the direct method, (b) the step-down method (allocate IT Department first), (e) the step-down method (allocate Human Resource Department first), and (d) the reciprocal method? 2. Which method would you recommend the University of Florida use to allocate service-department costs? Why?
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1 Total overhead costs of the operating departments a Direct method School of Business 825250 375120 ... View the full answer
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Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young
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