Question
The attached document contains information for H & M Store. Use that data to answer the following questions. Please work your solutions out on a
The attached document contains information for H & M Store. Use that data to answer the following questions. Please work your solutions out on a separate page, clearly labeling and showing your work and your answers. You may submit either a photo of your work, a word document, or an excel spreadsheet.
1. Assuming the company uses the direct method, determine the total $ amount of service department costs allocated to each Production Department.
2. Assuming the company uses the step method, determine the total $ amount of service department costs allocated to each Production Department.
3. Assuming the company uses the reciprocal method, determine the total $ amount of service department costs allocated to each Production Department.
MID-CHAPTER REVIEW Suppose an H&M retail store is organized into four departments: Women's Apparel, Men's Apparel, Ad- ministrative Services, and Facilities Services. The first two departments are the primary producing depart ments; the last two departments provide services to the producing departments as well as to each other. Top management has decided that, for internal reporting purposes, the cost of service department opera- tions should be allocated to the producing departments. Administrative Services costs are allocated on the basis of the number of employees, and Facilities Services costs are allocated based on the amount of square footage of floor space occupied. Hypothetical data pertaining to the cost allocations for February 2014 are as follows: Square Department Number of Footage Direct Department Cost Employees Ocoupied 15,000 7,500 2,500 1,000 15 60,000 50,000 18,000 12,000 Total. 29 26,000Step by Step Solution
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