Problem 11-55 (Algo) Comparison of Allocation Methods (LO 11-2, 3, 4) BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows. Employees Transactions Department direct costs Administration Accounting Domestic International 24 45 31 38,000 25,000 100,000 $363,000 $148,000 $950,000 $3,530,000 Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departments using the reciprocal method. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departments using the reciprocal method. Complete this question by entering your answers in the tabs below. Required A Required B Required C Allocate the cost of the service departments to the operating departments using the direct method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) To Domestic International 950,000 $ 3,530,000 From Department costs Administration allocation Accounting allocation Total cost Administration Accounting $ 363,000 $ 148,000 $ (363,000) 0 0 (148,000) $ 0 $ 0 $ 950,000 $ 3,530,000 Required A Required B Required: a. Allocate the cost of the service departments to the operating departments using the direct method. b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. c. Allocate the cost of the service departments to the operating departments using the reciprocal method. Complete this question by entering your answers in the tabs below. Required A Required B Required C Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) To Administration Accounting Domestic International $ 363,000 $ 148,000 $ 950,000 $ 3,530,000 From Department costs Administration allocation Accounting allocation Total cost 0 $ 363,000 $ 148,000 $ 950,000 $ 3,530,000
