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Question 4 Management at Thomason Media has decided to allocate the costs of the paper's two support departments (administration and human resources) to the two
Question 4 Management at Thomason Media has decided to allocate the costs of the paper's two support departments (administration and human resources) to the two revenue-generating departments (advertising and circulation). Administration costs are to be allocated on the basis of Rands of assets employed; human resources costs are to be allocated on the basis of number of employees. The following costs and allocation bases are available: Department Direct Costs Number of Employees Administration Human resources Advertising Circulation Totals R781 500 R492 700 R957 800 R1 352 600 R3 584 600 Rands of Assets Employed R387 100 R291 700 R762 400 R1 870 300 R3 311 500 Required: 4.1 Using the direct method allocate the support department costs to the revenue- generating departments. 4.2 Using the sequential method, allocate the support department costs to the revenue- generating departments. 4.3 Using the reciprocal method allocate the support department costs to the revenue- generating departments
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