Eidaudi Inc. is organized into two major sales divisions: Institutional clients and Retail clients. Eidaudi Inc....
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Eidaudi Inc. is organized into two major sales divisions: Institutional clients and Retail clients. Eidaudi Inc. also has two service departments: Finance and Administration. The Finance department's costs are allocated to the other departments based on a log of the hours spent on tasks for each user. The Administration department's costs are allocated to users based on the number of employees in each department. The following information is available for the most recent period: Administration Institutional $700,000 600 20 Finance $450,000 Overhead costs Research hours Number of employees Required: a) Allocate the service department costs to the Institutional and Retail divisions using the direct method. (2 marks) 50 12 Retail $1,000,000 $200,000 250 15 800 30 b) Assume that the step method is used and the Finance department is the first one to be allocated. Allocate the service department costs to the Institutional and Retail divisions. (3 marks) c) Assume that the reciprocal method is used. Write the reciprocal cost equations. (Do NOT solve the equations.) (2 marks) Eidaudi Inc. is organized into two major sales divisions: Institutional clients and Retail clients. Eidaudi Inc. also has two service departments: Finance and Administration. The Finance department's costs are allocated to the other departments based on a log of the hours spent on tasks for each user. The Administration department's costs are allocated to users based on the number of employees in each department. The following information is available for the most recent period: Administration Institutional $700,000 600 20 Finance $450,000 Overhead costs Research hours Number of employees Required: a) Allocate the service department costs to the Institutional and Retail divisions using the direct method. (2 marks) 50 12 Retail $1,000,000 $200,000 250 15 800 30 b) Assume that the step method is used and the Finance department is the first one to be allocated. Allocate the service department costs to the Institutional and Retail divisions. (3 marks) c) Assume that the reciprocal method is used. Write the reciprocal cost equations. (Do NOT solve the equations.) (2 marks)
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Answer rating: 100% (QA)
Solution a Direct Method Finance Department Costs 450000 Administration Department Costs 200000 Total Service Department Costs 650000 Institutional Di... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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