Question
Betty's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $180,000 are allocated on the basis of budgeted
Betty's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $180,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $75,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $125,000 and $150,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
|
| Support Departments | Production Departments | ||
|
| Warehouse Department | Data Center Department | Music | Books |
| Costs | $180,000 | $75,000 | $125,000 | $150,000 |
| Budgeted warehouse-hours | N/A | 250 warehouse-hours | 500 warehouse-hours | 750 warehouse-hours |
| Number of computer hours | 100 computer hours | N/A | 300 computer hours | 600 computer hours |
Allocate warehouse and data center costs to the operating departments, Music and Books, using the direct method.
a) $215,000 music; $315,000 books
b) $265,625 music; $283,333 books
c) $305,000 music; $225,000 books
d) $222,000 music; $308,000 books
Betty's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $180,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $75,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $125,000 and $150,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
|
| Support Departments | Production Departments | ||
|
| Warehouse Department | Data Center Department | Music | Books |
| Costs | $180,000 | $75,000 | $125,000 | $150,000 |
| Budgeted warehouse-hours | N/A | 250 warehouse-hours | 500 warehouse-hours | 750 warehouse-hours |
| Number of computer hours | 100 computer hours | N/A | 300 computer hours | 600 computer hours |
Allocate warehouse and data center costs to the operating departments, Music and Books, using the reciprocal method.
a) $265,625 music; $283,333 books
b) $220,000 music; $310,000 books
c) $220,593 music; $309,407 books
d) $218,627 music; $304,627 books
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My Adventures As An Auditor
Authors: Michael Quoter
1st Edition
1079508821, 978-1079508826
