Hello! In the past we have used the direct method to allocate service department costs to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Hello! In the past we have used the direct method to allocate service department costs to our revenue producing departments; however, I just attended a conference where one of the presenters demonstrated how the step method can produce significantly different departmental cost calculations. I don't know how much it would matter at Basic if we used the step down method, but this person at the conference had me convinced that it could matter quite a bit. As soon as I got back from the conference I got into the system and downloaded the attached summary reports (tab delimited) needed to allocate costs from supporting departments to the producing departments for 2020. Please put together a report that shows the allocation using each method (direct and step) as well as a table that shows the differences (totals and as a percentage of support dept. cost) across the two allocation methods. For the step method, let's first allocate the departments that provide the most service to other support departments. Also, let's use the 12 month average of FTES and square footage for assignment where applicable. Otherwise, use the annual totals. Finally, please show me the differences for each department manager, as I'd like to know who will be affected the most if we switch to the step method. Thank you cost accountant! The Controller Upload the following files to complete this assignment: (1) A Microsoft Excel workbook named "allocation. The workbook should have 3 worksheets labeled "Direct," "Step," and "Differences. The worksheets will contain the schedules used to allocate the cost from the support departments to the producing departments in the first two worksheets. In the third worksheet, summarize the differences between the two methods by department and manager. In addition, the workbook will also have one or more additional worksheets that are used to hold the source data (i.e., the information in the files attached to this assignment) and perform interim calculations. Name worksheets that hold source data "sourcedata1," "sourcedata2" and "sourcedata3" Worksheets that contain interim calculations should be named "calc1" "calc2" and so on. The worksheets should be organized in the following order: Direct, Step, Differences, calc worksheets, sourcedata worksheets. (2) A PDF report that incorporates all 3 tables from the "Direct." "Step.," and "Differences" worksheets (in this order). After each allocation schedule, provide a written description of the schedule that explains the allocation technique and how it is applied at Basic Hospital to arrive at cost by department. After the "Differences" table, explain why the differences occur, using the department with the biggest difference as an example. Support Dept. Allocation base Medical Records Total Nursing Hours Accounting Total Direct Cost General Services Human Resources Total Patient Accounts Square Footage FTES Total Patient Revenue Department Medical Records 06-1000 Cohen 06-1001 Dillon Accounting General Services Human Resources 06-1003 Patient Accounts Urology 02-1005 Kline Orthopaedics Opthamology Dpt Current Dept. Manager Gastroenterology Cardiology Burn Center Emergency Oncology Obstetrics Neurology Maternity Intensive Care Unit General Surgery 02-1013 06-1002 Blasco Smith 06-1004 Cohen 02-1006 Dreyfus 02-1007 Kramer 02-1008 James 02-1009 Plammot 02-1010 Barnes 02-1011 Plammot 02-1012 Wellston Piedmont 02-1014 Rax Jills. 02-1015 02-1016 Cordona 02-1017 Jackson Hello! In the past we have used the direct method to allocate service department costs to our revenue producing departments; however, I just attended a conference where one of the presenters demonstrated how the step method can produce significantly different departmental cost calculations. I don't know how much it would matter at Basic if we used the step down method, but this person at the conference had me convinced that it could matter quite a bit. As soon as I got back from the conference I got into the system and downloaded the attached summary reports (tab delimited) needed to allocate costs from supporting departments to the producing departments for 2020. Please put together a report that shows the allocation using each method (direct and step) as well as a table that shows the differences (totals and as a percentage of support dept. cost) across the two allocation methods. For the step method, let's first allocate the departments that provide the most service to other support departments. Also, let's use the 12 month average of FTES and square footage for assignment where applicable. Otherwise, use the annual totals. Finally, please show me the differences for each department manager, as I'd like to know who will be affected the most if we switch to the step method. Thank you cost accountant! The Controller Upload the following files to complete this assignment: (1) A Microsoft Excel workbook named "allocation. The workbook should have 3 worksheets labeled "Direct," "Step," and "Differences. The worksheets will contain the schedules used to allocate the cost from the support departments to the producing departments in the first two worksheets. In the third worksheet, summarize the differences between the two methods by department and manager. In addition, the workbook will also have one or more additional worksheets that are used to hold the source data (i.e., the information in the files attached to this assignment) and perform interim calculations. Name worksheets that hold source data "sourcedata1," "sourcedata2" and "sourcedata3" Worksheets that contain interim calculations should be named "calc1" "calc2" and so on. The worksheets should be organized in the following order: Direct, Step, Differences, calc worksheets, sourcedata worksheets. (2) A PDF report that incorporates all 3 tables from the "Direct." "Step.," and "Differences" worksheets (in this order). After each allocation schedule, provide a written description of the schedule that explains the allocation technique and how it is applied at Basic Hospital to arrive at cost by department. After the "Differences" table, explain why the differences occur, using the department with the biggest difference as an example. Support Dept. Allocation base Medical Records Total Nursing Hours Accounting Total Direct Cost General Services Human Resources Total Patient Accounts Square Footage FTES Total Patient Revenue Department Medical Records 06-1000 Cohen 06-1001 Dillon Accounting General Services Human Resources 06-1003 Patient Accounts Urology 02-1005 Kline Orthopaedics Opthamology Dpt Current Dept. Manager Gastroenterology Cardiology Burn Center Emergency Oncology Obstetrics Neurology Maternity Intensive Care Unit General Surgery 02-1013 06-1002 Blasco Smith 06-1004 Cohen 02-1006 Dreyfus 02-1007 Kramer 02-1008 James 02-1009 Plammot 02-1010 Barnes 02-1011 Plammot 02-1012 Wellston Piedmont 02-1014 Rax Jills. 02-1015 02-1016 Cordona 02-1017 Jackson Hello! In the past we have used the direct method to allocate service department costs to our revenue producing departments; however, I just attended a conference where one of the presenters demonstrated how the step method can produce significantly different departmental cost calculations. I don't know how much it would matter at Basic if we used the step down method, but this person at the conference had me convinced that it could matter quite a bit. As soon as I got back from the conference I got into the system and downloaded the attached summary reports (tab delimited) needed to allocate costs from supporting departments to the producing departments for 2020. Please put together a report that shows the allocation using each method (direct and step) as well as a table that shows the differences (totals and as a percentage of support dept. cost) across the two allocation methods. For the step method, let's first allocate the departments that provide the most service to other support departments. Also, let's use the 12 month average of FTES and square footage for assignment where applicable. Otherwise, use the annual totals. Finally, please show me the differences for each department manager, as I'd like to know who will be affected the most if we switch to the step method. Thank you cost accountant! The Controller Upload the following files to complete this assignment: (1) A Microsoft Excel workbook named "allocation. The workbook should have 3 worksheets labeled "Direct," "Step," and "Differences. The worksheets will contain the schedules used to allocate the cost from the support departments to the producing departments in the first two worksheets. In the third worksheet, summarize the differences between the two methods by department and manager. In addition, the workbook will also have one or more additional worksheets that are used to hold the source data (i.e., the information in the files attached to this assignment) and perform interim calculations. Name worksheets that hold source data "sourcedata1," "sourcedata2" and "sourcedata3" Worksheets that contain interim calculations should be named "calc1" "calc2" and so on. The worksheets should be organized in the following order: Direct, Step, Differences, calc worksheets, sourcedata worksheets. (2) A PDF report that incorporates all 3 tables from the "Direct." "Step.," and "Differences" worksheets (in this order). After each allocation schedule, provide a written description of the schedule that explains the allocation technique and how it is applied at Basic Hospital to arrive at cost by department. After the "Differences" table, explain why the differences occur, using the department with the biggest difference as an example. Support Dept. Allocation base Medical Records Total Nursing Hours Accounting Total Direct Cost General Services Human Resources Total Patient Accounts Square Footage FTES Total Patient Revenue Department Medical Records 06-1000 Cohen 06-1001 Dillon Accounting General Services Human Resources 06-1003 Patient Accounts Urology 02-1005 Kline Orthopaedics Opthamology Dpt Current Dept. Manager Gastroenterology Cardiology Burn Center Emergency Oncology Obstetrics Neurology Maternity Intensive Care Unit General Surgery 02-1013 06-1002 Blasco Smith 06-1004 Cohen 02-1006 Dreyfus 02-1007 Kramer 02-1008 James 02-1009 Plammot 02-1010 Barnes 02-1011 Plammot 02-1012 Wellston Piedmont 02-1014 Rax Jills. 02-1015 02-1016 Cordona 02-1017 Jackson Hello! In the past we have used the direct method to allocate service department costs to our revenue producing departments; however, I just attended a conference where one of the presenters demonstrated how the step method can produce significantly different departmental cost calculations. I don't know how much it would matter at Basic if we used the step down method, but this person at the conference had me convinced that it could matter quite a bit. As soon as I got back from the conference I got into the system and downloaded the attached summary reports (tab delimited) needed to allocate costs from supporting departments to the producing departments for 2020. Please put together a report that shows the allocation using each method (direct and step) as well as a table that shows the differences (totals and as a percentage of support dept. cost) across the two allocation methods. For the step method, let's first allocate the departments that provide the most service to other support departments. Also, let's use the 12 month average of FTES and square footage for assignment where applicable. Otherwise, use the annual totals. Finally, please show me the differences for each department manager, as I'd like to know who will be affected the most if we switch to the step method. Thank you cost accountant! The Controller Upload the following files to complete this assignment: (1) A Microsoft Excel workbook named "allocation. The workbook should have 3 worksheets labeled "Direct," "Step," and "Differences. The worksheets will contain the schedules used to allocate the cost from the support departments to the producing departments in the first two worksheets. In the third worksheet, summarize the differences between the two methods by department and manager. In addition, the workbook will also have one or more additional worksheets that are used to hold the source data (i.e., the information in the files attached to this assignment) and perform interim calculations. Name worksheets that hold source data "sourcedata1," "sourcedata2" and "sourcedata3" Worksheets that contain interim calculations should be named "calc1" "calc2" and so on. The worksheets should be organized in the following order: Direct, Step, Differences, calc worksheets, sourcedata worksheets. (2) A PDF report that incorporates all 3 tables from the "Direct." "Step.," and "Differences" worksheets (in this order). After each allocation schedule, provide a written description of the schedule that explains the allocation technique and how it is applied at Basic Hospital to arrive at cost by department. After the "Differences" table, explain why the differences occur, using the department with the biggest difference as an example. Support Dept. Allocation base Medical Records Total Nursing Hours Accounting Total Direct Cost General Services Human Resources Total Patient Accounts Square Footage FTES Total Patient Revenue Department Medical Records 06-1000 Cohen 06-1001 Dillon Accounting General Services Human Resources 06-1003 Patient Accounts Urology 02-1005 Kline Orthopaedics Opthamology Dpt Current Dept. Manager Gastroenterology Cardiology Burn Center Emergency Oncology Obstetrics Neurology Maternity Intensive Care Unit General Surgery 02-1013 06-1002 Blasco Smith 06-1004 Cohen 02-1006 Dreyfus 02-1007 Kramer 02-1008 James 02-1009 Plammot 02-1010 Barnes 02-1011 Plammot 02-1012 Wellston Piedmont 02-1014 Rax Jills. 02-1015 02-1016 Cordona 02-1017 Jackson Hello! In the past we have used the direct method to allocate service department costs to our revenue producing departments; however, I just attended a conference where one of the presenters demonstrated how the step method can produce significantly different departmental cost calculations. I don't know how much it would matter at Basic if we used the step down method, but this person at the conference had me convinced that it could matter quite a bit. As soon as I got back from the conference I got into the system and downloaded the attached summary reports (tab delimited) needed to allocate costs from supporting departments to the producing departments for 2020. Please put together a report that shows the allocation using each method (direct and step) as well as a table that shows the differences (totals and as a percentage of support dept. cost) across the two allocation methods. For the step method, let's first allocate the departments that provide the most service to other support departments. Also, let's use the 12 month average of FTES and square footage for assignment where applicable. Otherwise, use the annual totals. Finally, please show me the differences for each department manager, as I'd like to know who will be affected the most if we switch to the step method. Thank you cost accountant! The Controller Upload the following files to complete this assignment: (1) A Microsoft Excel workbook named "allocation. The workbook should have 3 worksheets labeled "Direct," "Step," and "Differences. The worksheets will contain the schedules used to allocate the cost from the support departments to the producing departments in the first two worksheets. In the third worksheet, summarize the differences between the two methods by department and manager. In addition, the workbook will also have one or more additional worksheets that are used to hold the source data (i.e., the information in the files attached to this assignment) and perform interim calculations. Name worksheets that hold source data "sourcedata1," "sourcedata2" and "sourcedata3" Worksheets that contain interim calculations should be named "calc1" "calc2" and so on. The worksheets should be organized in the following order: Direct, Step, Differences, calc worksheets, sourcedata worksheets. (2) A PDF report that incorporates all 3 tables from the "Direct." "Step.," and "Differences" worksheets (in this order). After each allocation schedule, provide a written description of the schedule that explains the allocation technique and how it is applied at Basic Hospital to arrive at cost by department. After the "Differences" table, explain why the differences occur, using the department with the biggest difference as an example. Support Dept. Allocation base Medical Records Total Nursing Hours Accounting Total Direct Cost General Services Human Resources Total Patient Accounts Square Footage FTES Total Patient Revenue Department Medical Records 06-1000 Cohen 06-1001 Dillon Accounting General Services Human Resources 06-1003 Patient Accounts Urology 02-1005 Kline Orthopaedics Opthamology Dpt Current Dept. Manager Gastroenterology Cardiology Burn Center Emergency Oncology Obstetrics Neurology Maternity Intensive Care Unit General Surgery 02-1013 06-1002 Blasco Smith 06-1004 Cohen 02-1006 Dreyfus 02-1007 Kramer 02-1008 James 02-1009 Plammot 02-1010 Barnes 02-1011 Plammot 02-1012 Wellston Piedmont 02-1014 Rax Jills. 02-1015 02-1016 Cordona 02-1017 Jackson Hello! In the past we have used the direct method to allocate service department costs to our revenue producing departments; however, I just attended a conference where one of the presenters demonstrated how the step method can produce significantly different departmental cost calculations. I don't know how much it would matter at Basic if we used the step down method, but this person at the conference had me convinced that it could matter quite a bit. As soon as I got back from the conference I got into the system and downloaded the attached summary reports (tab delimited) needed to allocate costs from supporting departments to the producing departments for 2020. Please put together a report that shows the allocation using each method (direct and step) as well as a table that shows the differences (totals and as a percentage of support dept. cost) across the two allocation methods. For the step method, let's first allocate the departments that provide the most service to other support departments. Also, let's use the 12 month average of FTES and square footage for assignment where applicable. Otherwise, use the annual totals. Finally, please show me the differences for each department manager, as I'd like to know who will be affected the most if we switch to the step method. Thank you cost accountant! The Controller Upload the following files to complete this assignment: (1) A Microsoft Excel workbook named "allocation. The workbook should have 3 worksheets labeled "Direct," "Step," and "Differences. The worksheets will contain the schedules used to allocate the cost from the support departments to the producing departments in the first two worksheets. In the third worksheet, summarize the differences between the two methods by department and manager. In addition, the workbook will also have one or more additional worksheets that are used to hold the source data (i.e., the information in the files attached to this assignment) and perform interim calculations. Name worksheets that hold source data "sourcedata1," "sourcedata2" and "sourcedata3" Worksheets that contain interim calculations should be named "calc1" "calc2" and so on. The worksheets should be organized in the following order: Direct, Step, Differences, calc worksheets, sourcedata worksheets. (2) A PDF report that incorporates all 3 tables from the "Direct." "Step.," and "Differences" worksheets (in this order). After each allocation schedule, provide a written description of the schedule that explains the allocation technique and how it is applied at Basic Hospital to arrive at cost by department. After the "Differences" table, explain why the differences occur, using the department with the biggest difference as an example. Support Dept. Allocation base Medical Records Total Nursing Hours Accounting Total Direct Cost General Services Human Resources Total Patient Accounts Square Footage FTES Total Patient Revenue Department Medical Records 06-1000 Cohen 06-1001 Dillon Accounting General Services Human Resources 06-1003 Patient Accounts Urology 02-1005 Kline Orthopaedics Opthamology Dpt Current Dept. Manager Gastroenterology Cardiology Burn Center Emergency Oncology Obstetrics Neurology Maternity Intensive Care Unit General Surgery 02-1013 06-1002 Blasco Smith 06-1004 Cohen 02-1006 Dreyfus 02-1007 Kramer 02-1008 James 02-1009 Plammot 02-1010 Barnes 02-1011 Plammot 02-1012 Wellston Piedmont 02-1014 Rax Jills. 02-1015 02-1016 Cordona 02-1017 Jackson
Expert Answer:
Answer rating: 100% (QA)
Here are the steps involved in allocating service department costs using the direct and step methods Direct Method 1 Calculate the total cost of each ... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0078111006
14th edition
Authors: Ray Garrison, Eric Noreen and Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Aardvark Delivery Service (ADS)' was formed 30 years ago with a mandate to establish a private delivery system in the country of Aardvark. By 20X5, ADS was handling close to 30 million pieces of mail...
-
I cant understand whats happening here, said Mike Holt, president of Severson Products, Inc. We always seem to bid too high on jobs that require a lot of labor time in the Finishing Department, and...
-
What are the costs of healthcare, where does the money come from, and where is it spent?
-
For an ac circuit with resistance 10.0 m, capacitance 5.00 F, frequency 10.0 kHz, and E = 15.0 mV: (a) Find the impedance (in ohms), (b) Find the phase angle, (c) Find the current.
-
Diane's Designs is a small business run out of its owner's house. For the past six months, the company has been selling two products, a welcome sign and a birdhouse. The owner has been concerned...
-
Eaton Company issued \(\$ 600,000\) of eight percent, 20 -year bonds at 106 on January 1, 2013. Interest is payable semiannually on July 1 and January 1. Through January 1, 2019, Eaton amortized \(\$...
-
Scholes Systems supplies a particular type of office chair to large retailers such as Target, Costco, and Office Max. Scholes is concerned about the possible effects of inflation on its operations....
-
Return to questior The Western Pipe Company has the following capital section in its balance sheet. Its stock is currently selling for $7 per share. Common stock (30,000 shares at $2 par) Capital in...
-
Suppose that there are p = 4 quality characteristics, and in correlation form all four variables have variance unity and that all pairwise correlation coefficients are 0.9. The in-control value of...
-
Portsmouth Company makes upholstered furniture. Its only variable cost is direct materials. The demand for the company's produ far exceeds its manufacturing capacity. The bottleneck (or constraint)...
-
Mauro Products distributes a single product, a woven basket whose selling price is $20 per unit and whose variable expense is $17 per unit. The company's monthly fixed expense is $3,300. Required: 1....
-
For each of the following independent cases (A through E), compute the missing values in the table: Case Prime Cost Conversion Cost Direct Materials Direct Manufacturing Labor Overhead Total...
-
Examine the emergence of technology and electronic health systems in health care since the passage of the Health Insurance Portability and Accountability Act (HIPAA). Provide an analysis of the...
-
Quail Company builds snowboards. Assume that you have the following information about Quail Company's costs for the most recent year. Cost of fiberglass (raw material) Advertising $ 119,000 67,200...
-
Find commonalities and differences, look for patterns. Provide an analysis in the format we've established. Determine the order of morphemes within a word. 1. nimitsita 2. nikita 3. tikmaka 4....
-
Grand Chocolate Inc. is a producer of premium chocolate based in Palo Alto. i) (Click the icon to view additional information.) More info - Data table The company has a separate division for each of...
-
When is the indirect pattern appropriate, and what are the benefits of using it?
-
Solex Company produces a high-quality insulation material that passes through two production processes. Data for June for the first process follow: Required: 1. Assume that the company uses the...
-
Krollon Company uses the FIFO method in its process costing system. The following data are for the most recent month of operations in one of the companys processing departments: According to the...
-
Chris Shannon is employed by Acme Company and is paid $18 per hour. Last week she worked 36 hours assembling one of the companys products and was idle 4 hours due to material shortages. Acmes...
-
Geary Company had the following transactions: Apr. 15 Issued a \(\$ 6,000,60\)-day, eight percent note payable in payment of an account with Marion Company. May 22 Borrowed \(\$ 50,000\) from...
-
The Longo Corporation issued \(\$ 50\) million maturity value of six percent coupon rate bonds, with interest paid semiannually. At the time of the bond issuance, equivalent risk-rated debt...
-
At December 31, 2017, Seattle Corporation had two notes payable outstanding (notes 1 and 2). At December 31, 2018, Seattle also had two notes payable outstanding (notes 3 and 4). These notes are...
Study smarter with the SolutionInn App