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Please show solution in excel and try to make clear what was done. Thank you! Support-department cost allocations; direct, step-down, and reciprocal methods. Ballantine Corporation
Please show solution in excel and try to make clear what was done. Thank you!
Support-department cost allocations; direct, step-down, and reciprocal methods. Ballantine Corporation has two operating departments: Eastern Department and Western Department. Each of the operating departments uses the services of the company's two support departments: Engineering and Information Technology. Additionally, the Engineering and Information Technology departments use the services of each other. Budgeted data are as follows: | Support Departments Operating Departments Information Eastern Western Engineering Technology Department Department Total Budgeted overhead costs before S300,000 $250,000 $650,000 $920,000 $2,120,000 any interdepartment cost allocations Support work furnished: By Engineering Budgeted Engineering salaries $60,000 $50,000 $90,000 $200,000 Percentage 30% 25% 45% 100% By Information Technology Budgeted IT service hours 450 1,500 1,050 3,000 Percentage 15% 50% 35% 100% Required: 1. Using an Excel spreadsheet, complete a support department allocation to determine the total overhead costs of the operating departments (Eastern and Western) after the support- department costs of Engineering and Information Technology have been allocated using (a) the direct method, (b) the step-down method (allocate Engineering first), and (c) the reciprocal method? 2. Which method would you recommend that Ballantine Corporation use to allocate service- department costs? WhyStep by Step Solution
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