Question

BlluStar 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 Transactions 27 37 36 28,eee 8e,ee0 37,000 Book Department direct $140,e08 $955,000 $3,590,e00 $353,e0e costs Print eterences Required: a. Allocate the cost of the service departments to the operating departments using the direct method b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration c. Allocate the cost of the service departments to the operating departments using the reciprocal method Complete this question by entering your answers in the tabs below. Required B Required C Required 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.)

Answer 1

Answer:-

Using direct method:-

To

From	administration	accounting	domestic	International
Department costs	353000	140000	955000	3590000
Administration allocation (37:36)	(353000)		178917.8	174082.19
Accounting allocation (20:80)		(140000)	28000	112000
Total cost allocation			$1161917.8	$3876082.19

Note:-

Administartion allocation

=353000*(37/(37+36))=178917.8

=353000*(36/73)=174082.19