1). Use the information in the table on the previous page to allocate costs to the mission...
Question:
1). Use the information in the table on the previous page to allocate costs to the mission centers using the direct distribution method.
Information in the Table
Allocation Statistics | |||
Direct | Purchasing: | Administration | |
Cost Centers | Costs ($) | Purchase Orders (%) | Total Salaries (%) |
Support | |||
Purchasing | 80,000 | 5 | |
Administration | 40,000 | 15 | - |
Mission | - | ||
Soup Kitchens | 900,000 | 40 | 90 |
Counseling | 300,000 | 45 | 5 |
Total Cost | 1,320,000 | 100 | 100 |
Direct Distribution Method
Soup Kitchen | Counseling | Purchasing | Administration | |
Operating costs | $900,000 | $300,000 | $80,000 | $40,000 |
Purchasing (in ratio of 40-45) | $37,647 | $ 42,353 | $(80,000) | |
Administration (in ratio of 90.5) | $ 37,895 | $ 2,105 | $ (40,000) | |
Total | $ 975,542 | $ 344,458 | $ - | $ - |
2). Using the information from Problem 1, allocate the costs using the step-down method. Compare the results with Problem 1. Do they differ?
3). Using the information from Problem 2, allocate the costs using the step-down method, but change the order of step-down from that used when you solved Problem 2. Do your results differ from those you found in Problem 2?
Allocation Statistics | |||
Direct | Purchasing: | Administration | |
Cost Centers | Costs ($) | Purchase Orders (%) | Total Salaries (%) |
Support | |||
Purchasing | 80,000 | 5 | |
Administration | 40,000 | 15 | - |
Mission | - | ||
Soup Kitchens | 900,000 | 40 | 90 |
Counseling | 300,000 | 45 | 5 |
Total Cost | 1,320,000 | 100 | 100 |
Elementary Linear Algebra with Applications
ISBN: 978-0471669593
9th edition
Authors: Howard Anton, Chris Rorres