Question

Vision Books an online book rear has two operating departments corporate sales and consumer sales and two support departments human resources and information systems. Each salos department conducts merchandising and marketing operations independently Vision Books uses number of employees to allocate human resources costs and processing time to a locatie information systems costs. The following data are available for September 2017 Click the icon to view the data) Read the requirements Requirement 1. Alocate the support department costs to the operating departments using the direct method (Do not found warmediary calculations Only round the amount you input in the call to the nearest Dollar Use parentheses or minus sign when decreasing departments by allocating costs. E ra o for any zoro balance. Abbreviations used:HR Human resources Infoinformation) Support Departments HR Info Systems Operating Departments Corporate Consumer Costs incurred Allocation of HR costs Allocation of into System costs Total budgeted costs of operating departments

Answer 1

Please refer the below image to see the formulas:

Solution Required Allocation of support department costs to the operating departments using the direct method Under direct method, Support department costs is directly allocated to the operating departments using the allocation base. In this method, no cost from one support department to another support department is allocated. This method is the simple method and ignores the services provided by one support department to another support department The support departments costs shall be allocated using the following appropriate allocation base: Allocation Base consumed Corporate Consumer Support departments Allocation base Total Sales Sales Number of employees HR Department Info. Systems 48 32 80 Processing time (in minutes) 1,750 1,400 3,150 Operating Departments Support Departments Total Info. Systems Corporate HR Consumer $500,000 $80,000 ($80,000) $930,000 $1,770,000 Costs incurred $260,000 Allocation of HR costs $48,000 $32,000 $115,556 $647,556 ($260,000) Allocation of Info. Systems costs Total budgeted costs of operating departments $144,444 $1,770,000 $0 $0 $1,122,444

А C D Е F Н 1 Solution 2 Required: Allocation of support department costs to the operating departments using the direct method Under direct method, Support department costs is directly allocated to the operating departments using the allocation base. In this method, no cost from one support department to another support department is allocated. This method is the simple method and ignores the services provided by one support department to another support department The support departments costs shall be allocated using the following appropriate allocation base: 6 7 8 Allocation Base consumed Сoгрoгate Consumer Support departments Allocation base Total Sales Sales 10 HR Department Info. Systems Number of employees 48 32 =F10+G10 Processing time (in minutes) 11 1750 1400 =F11+G11 12 13 Operating Departments 14 Support Departments Info. Systems 15 HR Сoгрогate Consumer Total SUM(E16:H16) 80000 -E16 500000 -E17 G10/H10 -F18 G11/H11 16 260000 |930000 -E17 F10/H10 -F18 F11/H11 -SUMIG16:G18) -SUM(H16:H18)SUME19:H19) Costs incurred 17 Allocation of HR costs 18 Allocation of Info. Systems costs -F16 SUME16:E18)-SUM(F16:F18) 19 Total budgeted costs of operating departments 20