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Boppity Book and Music Store (BBMS) has two service departments: thc Warchouse and the Data Centre. The Warehouse Department (Warehouse) costs of for the current
Boppity Book and Music Store (BBMS) has two service departments: thc Warchouse and the Data Centre. The Warehouse Department (Warehouse) costs of for the current year totaled $200,000. The Data Centre (Data) Department costs for the current year totaled $100,000. The warehouse costs are allocated on the basis of budgeted warehouse-square feet usage and the data costs are allocated based on the number of computer hours (number of hours someone is logged into the computer system). The costs of operating departments Music and Books are $125,000 and $150,000, respectively before any allocation of the Warehouse and Data departments. The warehouse has 22,000 square feet and it is budgeted to be used by the dierent departments as follows: Total Support Departments Warehouse Data 2,000 5,000 Operating Departments Music Books 6,000 9,000 Budgeted warehouse square feet 22,000 The budget computer hours estimated to be 85,000 and utilized by the different departments as follows: Support Departments Operating Departments Total Warehouse Data Music Books Number of computer hours 5,000 45,000 30,000 85,000 5,000 a) What are the amounts allocated to each of the Music and Books departments from the two support departments' costs using the direct method (4 marks). Ignore part a), if the company decided to use the reciprocal method instead, what will the total costs in each of the Music and Books departments. (6 marks) b)
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