King Inc. allocates the costs of the 2 support departments (administration and human resources) to the 2 revenue-generation departments (assembly and finishing). Human resources costs are to be allocated on basis of employees; administration costs are to be allocated on the basis of dollars of assets employed.

Total initial departmental costs of support departments	Human Resources	Administration	Total
	$ 250,000	$ 370,000	$ 620,000

Department	Number of Employees	Assets Employed
Administration	6	$ 190,000
Human Resources	5	145,000
Assembly	6	400,000
Finishing	14	600,000
Totals	31	1,335,000

Required: You must use cell references and formulas in your solution to earning credit. For #3 you must use the add-in Solver in Excel to determine the allocation. .

1. Develop a table to show how the direct method allocates the administration and human resources department costs to the Assembly and Finishing departments.

2. Develop a table to show how the step method allocates the administration and human resources department costs to the Assembly and Finishing departments assuming administration provides the greatest benefits to human resources.

3. Using the solver add in for Excel allocate the administration and human resources department costs to the Assembly and Finishing departments, which will determine the interrelationships between the two support departments. You need to set up proportion tables,

table of allocation base, set of change for solvers, simultaneous equations, target cell, and then a table showing the allocation to the operating departments using the reciprocal method.

Answer rating: 100% (QA)

Direct Method Allocation Department HR Cost Admin Cost Total Cost Assembly 80000 38000 118000 Finishing 100000 52000 152000 Total 180000 90000 270000 ... View the full answer