Finch Information Services, Inc., has two service departments: human resources and billing. Finch's operating departments, organized according to the special industry each department serves, are health care, retail, and legal services. The billing department supports only the three operating departments, but the human resources department supports all operating departments and the billing department. Other relevant information follows. Number of employees Annual cost* Annual revenue Human Resources 20 $900,000 Billing 50 $2,710,000 Health Care 195 $6,050,000 $9,500,000 Retail 145 $4,850,000 $5,950,000 Legal Services 110 $2,850,000 $4,550,000 *This is the operating cost before allocating service department costs. Required a. Allocate service department costs to operating departments, assuming that Finch adopts the step method. The company uses the number of employees as the base for allocating human resources department costs and department annual revenue as the base for allocating the billing department costs. b. Allocate service department costs to operating departments, assuming that Finch adopts the direct method. The company uses the number of employees as the base for allocating the human resources department costs and department annual revenue as the base for allocating the billing department costs. C. Compute the total allocated cost of service centers for each operating department using each allocation method. Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Req ci Req C2 Allocate service department costs to operating departments, assuming that Finch adopts the step method. The company uses the number of employees as the base for allocating human resources department costs. Department Allocation Rate x Weight of Base Il Allocated Cost Billing Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Req C1 Req c2 Allocate service department costs to operating departments, assuming that Finch adopts the step method. The company uses the department annual revenue as the base for allocating the billing department costs. (Round "Allocation rate" to 2 decimal places.) Department Allocation Rate * Weight of Base = Allocated Cost Health Care Retail Legal Services Total Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Req c1 Req C2 Allocate service department costs to operating departments, assuming that Finch adopts the direct method. The company uses the number of employees as the base for allocating human resources department costs. Department Allocation Rate X Weight of Base Allocated Cost Billing Health Care X Retail XX Legal Services Total Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Req C1 Reg C2 Allocate service department costs to operating departments, assuming that Finch adopts the direct method. The company uses the department annual revenue as the base for allocating the billing department costs. (Round "Allocation rate" to 4 decimal places.) Department Allocation Rate X Weight of Base Allocated Cost Health Care Retail X X Legal Services = Total Complete this question by entering your answers in the tabs below. Req A1 Reg A2 Req B1 Req B2 Req C1 Reg C2 Compute the total allocated cost of service centers for each operating department using step method. Department Human Resources Billing Total Allocated Cost Health Care + Retail + 11 Legal Services + Total Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req B1 Req B2 Req C1 Req C2 Compute the total allocated cost of service centers for each operating department using direct method. Department Human Resources Billing Total Allocated Cost Health Care + Retail + Legal Services + Total
