Question
Not-A-Mega Bank has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for
Not-A-Mega Bank has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the year ended December 31 follows: |
Administration | Communications | Facilities | Deposits | Loans | |||||||||||
Direct costs | $290,000 | $470,000 | $397,400 | $13,510,000 | $9,900,000 | ||||||||||
Employee hours | 14,500 | 18,000 | 14,500 | 271,250 | 216,250 | ||||||||||
Number of employees | 5 | 10 | 5 | 140 | 80 | ||||||||||
Square footage occupied | 3,500 | 9,500 | 4,300 | 173,000 | 150,000 | ||||||||||
The costs of the service departments are allocated on the following bases: Administration, employee hours; Communications, number of employees; and Facilities, square footage occupied. (Do not round your intermediate calculations. Round your answer to the nearest dollar amount.) |
Required: | |
(a) | Assume that Not-A-Mega Bank elects to distribute service department costs directly to production departments using the direct method. What amount of Communications Department costs is allocated to the Deposits Department? |
(b) | Assume the same method of allocation as in part (a). What amount of Administration Department costs is allocated to the Loans Department?
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