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I-books, an online book retailer, has two operating departments-corporate sales and consumer sales-and two support departments-human resources and information systems. Each sales department conducts merchandising
I-books, an online book retailer, has two operating departments-corporate sales and consumer sales-and two support departments-human resources and information systems. Each sales department conducts merchandising and marketing operations independently. I-books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The following data are available for September 2020: (Click the icon to view the data.) Read the requirements. Requirement 1. Allocate the support departments' costs to the operating departments using the direct method. (Do not round intermediary calculations. Only round the amount you input in the input field to the nearest dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances. Abbreviations used: HR = Human resources; Info. Information.). Costs incurred Allocation of HR costs Allocation of Info. System costs Support Departments HR Info. Systems Operating Departments Corporate Consumer Total Total budgeted costs of operating departments Requirement 2. Rank the support departments based on the percentage of their services provided to other support departments. Use this ranking to allocate the support departments' costs to the operating departments based on the step-down method. First, rank, from highest to lowest, the support departments based on the percentage of their services provided to other support departments. (Round percentages to five decimal places.) Support department Percentage % Next, use this ranking t allocate the support departments' costs to the operating departments based on the step-down method. (Do not round intermediary calculations and round your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances.) Support Departments Operating Departments Costs incurred HR Info. Systems Corporate Total budgeted costs of operating departments Requirement 3. How could you have ranked the support departments differently? You can rank I-books' support departments using an alternative approach-ranking based on the Using the step-down method, this approach would result in the following sequence: Step 1: Step 2: Consumer Total Data table 1 A B 2 Budgeted costs incurred before any 3 interdepartment cost allocations Support work supplied by human 4 resources department 5 Budgeted number of employees Support work supplied by information 6 systems department 7 Budgeted processing time (in minutes) C D E SUPPORT OPERATING DEPARTMENTS DEPARTMENTS Human Information Corporate Consumer Resources Systems Sales Sales 60,000 $ 280,000 $ 970,000 $ 505,000 0 20 48 32 360 0 2,000 1,640
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