Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help with section D. Thank you. ok 1. Road Trip Tours provides guided educational tours to college alumni associations. The company is divided into

image text in transcribed

image text in transcribed

image text in transcribedPlease help with section D.

Thank you.

ok 1. Road Trip Tours provides guided educational tours to college alumni associations. The company is divided into two operating divisions: domestic tours and world tours. Each of the tour divisions uses the services of the company's two support departments: Administration and Information Technology. Additionally, the Administration and Information Technology departments use the services of each other. Data concerning the past year are as follows: (Click the icon to view the past year data.) Read the requirements (a) Direct method: What are the total overhead costs of the operating departments (domestic and world tours) after the support department costs of Administration and Information Technology have been allocated using the direct method? (Do not round intermediary calculations. Only round the amount you input in the input field to the nearest dollar.) Domestic Tours World Tours Direct Method Budgeted overhead costs before interdepartment cost allocations Allocation of Administration costs $ 1,800,000 1,600,000 $ 176,000 140,000 264,000 Allocation of Information Technology costs 210,000 1,916,000 $ 2,274,000 Total budgeted overhead of operating departments (b) Step-down method (allocate Administration first): What are the total overhead costs of the operating departments (domestic and world tours) after the support department costs of Administration and Information Technology have been allocated using (b) the step-down method (allocate Administration first)? (Do not round intermediary calculations. Only round the amount you input in the input field to the nearest dollar. Complete all input fields. If a total is zero, enter "0". Use a minus sign or parentheses when decreasing departments by allocating costs.) Support Departments Operating Departments Information Domestic World Step-down Method Administration Technology Tours Tours Budgeted overhead costs before interdepartment cost allocations 440,000 $ 350,000 $ 1,600,000 $ 1,800,000 Allocation of Administration costs (440,000) 176,000 105,600 158,400 Allocation of Information Technology costs (526,000 210,400 315,600 0 $ 1,916,000 $ 2,274,000 Total budgeted overhead of operating departments (c) Step-down method (allocate Information Technology first): What are the total overhead costs of the operating departments (domestic and world tours) after the support department costs of Administration and Information Technology have been allocated using the step-down method (allocate Information Technology first)? (Do not round intermediary calculations. Only round the amount you input in the input field to the nearest dollar. Complete all input fields. If a total is zero, enter "0". Use a minus sign or parentheses for any amounts to be subtracted. In the sixth allocation of administrative costs, allocate the remaining balance to "World Tours". Note that slight rounding differences may occur.) (c) Step-down method (allocate Information Technology first): What are the total overhead costs of the operating departments (domestic and world tours) after the support department costs of Administration and Information Technology have been allocated using the step-down method (allocate Information Technology first)? (Do not round intermediary calculations. Only round the amount you input in the input field to the nearest dollar. Complete all input fields. If a total is zero, enter "0". Use a minus sign or parentheses for any amounts to be subtracted. In the sixth allocation of administrative costs, allocate the remaining balance to "World Tours". Note that slight rounding differences may occur.) Support Departments Operating Departments Information Domestic World Step-down Method Administration Technology Tours Tours Budgeted ovehead costs before interdepartment cost allocations 440,000 $ 350,000 $ 1,600,000 $ 1,800,000 Allocation of Administration costs (510,000) 204,000 306,000 70,000 Allocation of Information Technology costs (350,000) 112,000 168,000 0 $ 1,916,000 $ 2,274,000 Total budgeted overhead of operating departments (d) Reciprocal method using the liner equations What are the total overhead costs of the operating departments (domestic and world tours) after the support department costs of Administration and Information Technology have been allocated using the reciprocal method using the method of repeated iterations and liner equations? Before we can allocate the support departments' costs to the two operating departments using the reciprocal method, let's first determine the linear equations for each support department. Then off-line solve for Administration and Information Technology, so that you may complete the allocation of the support departments' costs. (Abbreviations used: AD = administration; IT = information technology.) AD $440,000 + 0.2 IT IT: $350,000 + 0.4 AD Now allocate the support departments' costs (human resources and information systems) to the two operating departments using the reciprocal method. (Round proportions to five decimal places, XXXXX, and your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Complete all input fields. Enter a "0" for zero balances.) Support Departments Information Administration Technology Operating Departments Domestic World Tours Tours Total Reciprocal Method Budgeted overhead costs before interdepartment cost allocations Allocation of Administration costs $ 440,000 $ 350,000 $ 1,600,000 $ 1,800,000 $ 4,190,000 133,044 199,565 (571,739) 182,956 274.435 (554,348) 114,348 221,739 Allocation of Information Technology costs 0 $ 0 Total budgeted overhead of operating departments $ 1,916,000 $ 2,274,000 $ 4,190,000 (d) Reciprocal method using the method of repeated iterations This time, use repeated iterations. (Round your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Complete all input fields. Enter a "0" for any zero balances. Abbreviations administrative costs, allocate the remaining balance to "World Tours". Note that slight rounding differences may occur.) Support Departments Operating Departments Information Domestic World Administration Technology Tours Tours Total Reciprocal Method Budgeted overhead costs before interdepartment cost allocations 440000 1600000 1800000 4190000 350000 176000 First allocation of Administration costs (440000) 105600 158400 105200 168320 First allocation of IT costs Second allocation of Administration costs 526000 (526000) 42080 (42080) (105200) 8416 25248 13566 252480 37872 20199 Second allocation of IT costs Third allocation of Administration costs Third allocation of IT costs Fourth allocation of Admininstration costs Fourth allocation of IT costs Fifth allocation of Administration costs Fifth allocation of IT costs Sixth allocation of Administration costs Total budgeted OH of operating departments 1: Data Table Support Departments Operating Departments Information Domestic World Administration Technology Tours Tours Total $ 440,000 $ 350,000 $ 1,600,000 $ 1,800,000 $ 4,190,000 Budgeted overhead costs before any interdepartment cost allocations Support work furnished: By Administration Budgeted administration salaries Percentage By Information Technology Budgeted IT service hours Percentage -s $ 80,000 $ 48,000 $ 72,000 $ 200,000 40% 24% 36% 100% 1,000 1,600 2,400 5,000 L 20% 32% 48% 100% 2: Requirements

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Between The Lines Of The Balance Sheet The Plain Mans Guide To Published Accounts

Authors: Michael Greener

2nd Edition

0080240712, 9780080240718

More Books

Students also viewed these Accounting questions