Problem 11-49 Comparison of Allocation Methods (LO 11-2, 3, 4)

BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows:

	Administration			Accounting			Domestic			International
Employees					21			46			33
Transactions		37,000						21,000			84,000
Department direct costs	$	354,000		$	141,000		$	935,000		$	3,760,000

Required: *Show Calculations

a. Allocate the cost of the service departments to the operating departments using the direct method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)

	To
From	Administration	Accounting	Domestic	International
Department costs
Administration allocation
Accounting allocation
Totals

b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)

	To
From	Administration	Accounting	Domestic	International
Department costs
Administration allocation
Accounting allocation
Total cost allocated

c. Allocate the cost of the service departments to the operating departments using the reciprocal method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)

	To
From	Administration	Accounting	Domestic	International
Department costs
Administration allocation
Accounting allocation
Total cost allocated