Tech Books, an online book retailer, has two operating departmentscorporate sales and consumer salesand two support departmentshuman resources and information systems. Each sales department conducts merchandising and marketing operations independently. Tech Books uses number of employees to allocate human resources costs and processing time to allocate information systems costs. The following data are available for September 2020: Data table B 1 SUPPORT DEPARTMENTS Human Information Resources Systems D E OPERATING DEPARTMENTS Corporate Consumer Sales Sales $ 80,000 $ 280,000 $ 940,000 $ 510,000 2 Budgeted costs incurred before any 3 interdepartment cost allocations Support work supplied by human 4 resources department 5 Budgeted number of employees Support work supplied by information 6 systems department Budgeted processing time (in 7 minutes) 0 20 48 32 400 o 2,500 2,100 Requirements 1. Allocate the support departments' costs to the operating departments using the direct method. 2. Rank the support departments based on the percentage of their services provided to other support departments. Use this ranking to allocate the support departments' costs to the operating departments based on the step-down method. 3. How could you have ranked the support departments differently? Requirement 1. Allocate the support departments' costs to the operating departments using the direct method. (Do not round intermediary calculations. Only round the amount you input in the input field to the nearest dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances. Abbreviations used: HR = Human resources; Info. = Information.) Support Departments Operating Departments HR Info. Systems Corporate Consumer Total Costs incurred $ 20,000 $ 320,000 $ 900,000 $ 510,000 $1,750,000 Allocation of HR costs (20,000) 12,000 Allocation of Info. System costs (320,000) 177,778 142,222 0 0 $ 1,089,778 $ 660,222 $ 1,750,000 Total budgeted costs of operating departments 8,000 Requirement 2. Rank the support departments based on the percentage of their services provided to other support departments. Use this ranking to allocate the support departments' costs to the operating departments based on the step-down method. First, rank, from highest to lowest, the support departments based on the percentage of their services provided to other support departments. (Round percentages to five decimal places.) Support department Human Resources Information Systems Percentage 20.00000 % 10.00000 % Next, use this ranking to allocate the support departments' costs to the operating departments based on the step-down method. (Do not round intermediary calculations and round your final answers to the nearest whole dollar. Use parentheses or a minus sign when decreasing departments by allocating costs. Enter a "0" for any zero balances.) Support Departments Operating Departments HR Info. Systems Corporate Consumer Total Costs incurred $ 20,000 $ 320,000 $ 900,000 $ 510,000 $ 1,750,000 Allocation of HR costs (20,000) 9,600 6,400 4,000 0 324,000 (324,000) Allocation of Info. System costs 180,000 144,000 $ 0 $ 1,089,600 $ 660,400 $ 1,750,000 Total budgeted costs of operating departments Requirement 3. How could you have ranked the support departments differently? You can rank Vision Books' support departments using an alternative approach-ranking based on the dollar amount of services rendered to other support departments. Using the step-down method, this approach would result in the following sequence: Step 1: Allocate Info. Systems costs Step 2: Allocate HR costs
