1. Johnson & Johnson allocates service department costs: Administration $4,000,000, Maintenance $3,000,000, allocated to Production and Sales.
   • Requirements:
     • Apply the revenue recognition principle to determine when Johnson & Johnson should recognize revenue related to allocated service department costs.
     • Determine allocation rates using an appropriate cost allocation method.
     • Allocate costs to each operating department considering revenue recognition principles.
     • Prepare a cost allocation report that aligns with revenue recognition guidelines.
     • Evaluate the impact of revenue recognition on cost allocation decisions and financial reporting accuracy.