Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Support-department cost allocation Combucha Ltd provides consulting services to Small and Medium Enterprises (SME) and Large Enterprises (LE) clients. Combucha Ltd has two support departments

image text in transcribed

Support-department cost allocation Combucha Ltd provides consulting services to Small and Medium Enterprises (SME) and Large Enterprises (LE) clients. Combucha Ltd has two support departments Administrative Services (AS) and Information Systems (IS); and two operating departmentsSmall and Medium Enterprises (SME )and Large Enterprises (LE). For the first quarter of 2020, Combucha's cost records indicate the following: SUPPORT OPERATING AS IS SME LE TOTAL $600 000 $2 400 000 $ 8 756 000 $12 452 000 $24 208 000 25% 40% 35% 100% Budgeted OH cost Support work supplied by AS (Head count) Support work supplied by IS (Computer time) 10% 30% 60% 100% Required 1. Allocate the two support departments' costs to the two operating departments using the following methods: direct method (20 marks) b. step-down method (allocate AS first) (20 marks) reciprocal method using linear equations (30 marks) 2. Which method do you prefer? Why (30 marks) a. C

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Her Majestys Auditor An Adventure Novel With Steampunk Elements

Authors: Markus Pfeiler

1st Edition

164953339X, 978-1649533395

More Books

Students also viewed these Accounting questions

Question

Explain the forces that influence how people handle conflict

Answered: 1 week ago