Answer:
Bens Corporation
Allocation of Service Departments' Direct Costs:
Repairs HR IT M1 M2 Total
Direct costs $36,000 $55,600 $81,000 $172,600
Step allocation:
HR direct costs 5,560 -55,600 11,120 19,460 19,460 0
IT costs 0 0 -92,120 20,471 71,649 0
Repairs costs -41,560 0 0 16,624 24,936 0
Total costs allocated 0 0 0 $56,555 $116,045 $172,600
Explanation:
a) Data and Calculations:
Usage data:
Repairs HR IT M1 M2
Repairs 0% 0% 40% 60%
HR 10% __ 20% 35% 35%
IT 0% 10% __ 20% 70%
HR Costs = $55,600:
Repairs = $5,560 ($55,600 * 10%)
IT = $11,120 ($55,600 * 20%)
M1 = $19,460 ($55,600 * 35%)
M2 = $19,460 ($55,600 * 35%)
IT costs = $92,120:
Repairs = $0 ($92,120 * 0%)
M1 = $20,471 ($92,120 * 20/90)
m2 = $71,649 ($92,120 * 70/90)
Repair costs = $41,560:
M1 = $16,624 ($41,560 * 40%)
M2 = $24,936 ($41,560 * 60%)
