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Stampede gardens is located in Calgary, Alberta. It is organized into 6 departments: arcades and shows, food and beverage, rides, communications, human resources, and maintenance.
Stampede gardens is located in Calgary, Alberta. It is organized into 6 departments: arcades and shows, food and beverage, rides, communications, human resources, and maintenance. Stampede Gardens is implementing an ABC system to allocate the costs of the service activities (communications, human resources, and maintenance) to product-line departments (arcades and shows, food and beverage, and rides). Thus, the product-line departments are the cost objects. The total costs and cost drivers for each service activity are: Activity Total Cost Cost Driver Communication $16,000 Number of department-specific memos prepared and distributed Human 20,000 Number of employees resources Maintenance 18,000 Square metres Information regarding cost drivers and allocation bases is as follows: Number of Department- Number Square Specific Memos of Employees Metres Prepared & Distributed Arcades & shows 20 5,000 6 Food & beverage 50 7,000 4 Rides 30 6,000 6 Communications 10 1,000 4 Human resources 10 1,000 3 Maintenance 25 1,000 1 Direct costs and revenues for each product-line department are as follows: Revenues Direct Costs Arcades & shows $50,000 $8,000 Food & beverage 125,000 6,000 Rides 150,000 4,000 a) Calculate the allocation rate for each service activity. b) Interpret the allocation rate for each service activity (i.e., explain what it means). c) Calculate the total service activity costs allocated to each product-line department
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