Wild Bluebonnets, an ecotourism business, has two service centers, Human Resources and Financial Resources. They provide services
Question:
Wild Bluebonnets, an ecotourism business, has two service centers, Human Resources and Financial Resources. They provide services to each other as well as to two revenue centers, Solo Adventures and Team Adventures. Data for the company’s summer season are as follows:
Human Resources had total costs of $250,000, and Financial Resources had total costs of $100,000. Human Resources’ costs are assigned based on the number of employees, and Financial Resources’ costs are assigned based on the number of transactions.
Required
1. Assign service center costs using the direct method. Compute the costs of the revenue centers after allocation.
2. Assign service center costs using the step method. Assign the costs of Human Resources first and Financial Resources second. Compute the costs of the revenue centers after allocation.
3. Wild Bluebonnets is considering other allocation bases for assigning service center costs. Using the physical measures method and the ability to pay method, assign service center costs if Human Resources costs are assigned on the basis of number of revenue centers and Financial Resources’ costs are assigned on the basis of centerrevenue:
Step by Step Answer:
Managerial Accounting
ISBN: 978-0618777181
8th Edition
Authors: Susan V. Crosson, Belverd E. Needles