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BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows: Employees Transactions Department direct costs Administration Accounting 24 Domestic International 52 36,000 $357,000 $142,000 22,000 $ 945,000 24 88,000 $3,520,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) From Department costs Administration allocation Accounting allocation Totals Administration Accounting Domestic International b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) From Department costs Administration allocation Accounting allocation Total cost allocated To Administration Accounting Domestic International c. Allocate the cost of the service departments to the operating departments using the reciprocal method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) From Department costs Administration allocation Accounting allocation Total cost allocated Administration Accounting Domestic International
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