Question
Allocating costs of service centers to operating department direct method. Heidaka trust corporation has two service departments:actuary and economic analysis Heidaka also has three operating
Allocating costs of service centers to operating department direct method. Heidaka trust corporation has two service departments:actuary and economic analysis Heidaka also has three operating departments:annuity , fund management, and employee benefit services. The annual cost of operating the service department are $480,000 for actuary and $800,000 for economic analysis. Heidaka uses the direct method to allocate service center costs to operating departments . Other relevant data follow: Operating costs(OC) Revenue(R). Annuity (OC)$500,000 (R)$840,000 Fund management (OC)900,000 (R)1,260,000 Employee benefit services (OC)600,000 (R)1,100,000 Required: a) Use operating cost as the cost driver for allocating services center cost to operation department. b)Use revenue as the cost driver for allocating service center costs to operation departments.
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