Question

The following data apply to questions 6-8. Zeta Company budgets the following amounts for its Buildings & Grounds and Computer Services Departments in servicing each other and the two manufacturing divisions of Signs and Mailers: Used By Supplied By Building & Grounds Computer Services Signs Mailers Buildings & Grounds 0.20 0.60 0.20 Computer Services 0.15 0.30 0.55 The actual results for the time period were as follows: Used By Supplied By Building & Grounds Computer Services Signs Mailers Buildings & Grounds 0.10 0.60 0.30 Computer Services 0.25 0.350.40

Answer 1

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Zeta Company	Budgeted usages
Answer 6
Direct Method	Building & Grounds	Computer	Signs	Mailers	Total
Building & Grounds		0.20	0.60	0.20	1.00
Building & Grounds %			0.75	0.25	1.00
Fixed cost	50,000.00				50,000.00
Allocation	(50,000.00)		37,500.00	12,500.00	-
So answer is $ 37,500.	Option D
Answer 7	Budgeted usages
Step Down Method	Building & Grounds	Computer	Signs	Mailers	Total
Building & Grounds		0.20	0.60	0.20	1.00
Variable cost	90,000.00				90,000.00
Allocation	(90,000.00)	18,000.00	54,000.00	18,000.00	-
Computer Services	0.15		0.30	0.55	1.00
Computer Services %			0.35	0.65	1.00
Variable cost		21,000.00			21,000.00
Total Variable cost		39,000.00
Allocation		(39,000.00)	13,764.71	25,235.29	-
So answer is $ 25,235.	Option C
Answer 8	Budgeted usages
Reciprocal Method	Building & Grounds	Computer	Signs	Mailers	Total
Building & Grounds		0.20	0.60	0.20	1.00
Computer Services	0.15		0.30	0.55	1.00
Variable cost	90,000.00	21,000.00			111,000.00
Let variable cost of Building & Grounds be B&G and variable cost of Computer Services be CS.
So, CS= 21000+ 0.20 of B&G	Option D