The actual level ofsupport relationships among the four departments for the first quarter of 2007 was Used
Question:
The actual level ofsupport relationships among the four departments for the first quarter of 2007 was Used by Supplied by A/HR IS GOVT CORP A/HR — 25% 40% 35%
IS 10% — 30% 60%
The Administrative/Human Resource support percentages are based on head count.
The Information Systems support percentages are based on actual hours of computer time used.
Required 1. Allocate the two support department costs to the two operating departments using the fol¬
lowing methods.
a. Direct method
b. Step-down method (allocate Administrative/Human Resources first)
c. Step-down method (allocate Information Systems first)
2. Compare and explain differences in the support department costs allocated to each operat¬
ing department.
d.Identify three criteria that could determine the sequence for allocating support depart¬
ments using the step-down method.
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9780131971905
4th Canadian Edition
Authors: Charles T. Horngren, George Foster, Srikant M. Datar, Howard D. Teall