Question
Question 4-53 Use the information in the table on the previous page to allocate costs to the mission centers using the direct distribution method. Information
Question 4-53
Use the information in the table on the previous page to allocate costs to the mission centers using the direct distribution method.
Information in the Table
|
| Allocation Statistics | |
| Direct | Purchasing: | Administration |
Cost Centers | Costs ($) | Purchase Orders (%) | Total Salaries (%) |
|
|
|
|
Support |
|
|
|
Purchasing | 80,000 |
| 5 |
Administration | 40,000 | 15 | - |
Mission |
| - |
|
Soup Kitchens | 900,000 | 40 | 90 |
Counseling | 300,000 | 45 | 5 |
Total Cost | 1,320,000 | 100 | 100 |
Direct Distribution Method
| Soup Kitchen | Counseling | Purchasing | Administration |
Operating costs | $900,000 | $300,000 | $80,000 | $40,000 |
Purchasing (in ratio of 40-45) | $37,647 | $ 42,353 | $(80,000) |
|
Administration (in ratio of 90.5) | $ 37,895 | $ 2,105 |
| $ (40,000) |
|
|
|
|
|
Total | $ 975,542 | $ 344,458 | $ - | $ - |
Question 4-54
Using the information from Problem 4-53, allocate the costs using the step-down method. Compare the results with Problem 4-53. Do they differ?
Step-down Method
?????
Question 4-55
Using the information from Problem 4-54, allocate the costs using the step-down method, but change the order of step-down from that used when you solved Problem 4-54. Do your results differ from those you found in Problem 4-54?
|
| Allocation Statistics | |
| Direct | Purchasing: | Administration |
Cost Centers | Costs ($) | Purchase Orders (%) | Total Salaries (%) |
|
|
|
|
Support |
|
|
|
Purchasing | 80,000 |
| 5 |
Administration | 40,000 | 15 | - |
Mission |
| - |
|
Soup Kitchens | 900,000 | 40 | 90 |
Counseling | 300,000 | 45 | 5 |
Total Cost | 1,320,000 | 100 | 100 |
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