Allocation: Information Systems Total Costs after $- $(72,700.00) $39,654.55 $33,045.45 Allocation $670,154.55 $1,125,075.45 Step-down Allocation (A first) Direct Costs $234,400.00 $72,700.00 $489,860.00 $998,270.00 Allocation: Information $(234,400.00) $19,533.33 $117,200.00 $97,666.67 Systems (A) Direct Costs after $- A Allocation $92,233.33 $607,060.00 $1,095,936.67 Allocation: Quality Control $- $(92,233.33) $55,340.00 $36,893.33 (B) Direct Costs after $- $- All Allocations $662,400.00 $1,132,830.00 Step-down Allocation (B first) Direct Costs $234,400.00 $72,700.00 $489,860.00 $998,270.00 Allocation: Quality Control $16,776.92 $(72,700.00) $33,553.85 $22,369.23 (B) Direct Costs after $251,176.92 $- B Allocation $523,413.85 $1,020,639.23 Allocation: Information Systems (A) Direct Costs after All Allocations $(251,176.92) $- $137,005.59 $114,171.33 $- $- $660,419.44 $1,134,810.56 ☐ Basic Costs Information Systems Support Department Quality Control Support Department Food Collection Food Delivery Division Division Information Labor $180,000.00 $50,000.00 $- $- Supervision $24,400.00 $2,700.00 $- Hardware Depreciation $30,000.00 $20,000.00 $- $- $- Direct Costs $234,400.00 $72,700.00 $489,860.00 $998,270.00 Allocation: QC 21 Units 0 42 28 Allocation: IS 0 Units 320 1920 1600 Direct Allocation Direct Costs $234,400.00 $72,700.00 $489,860.00 $998,270.00 Allocation: Quality Control $(234,400.00) $- $140,640.00 $93,760.00
Case Study:
Explore the website of SecondBite and watch carefully the following case study interview: https://youtu.be/q4UBr1ePB3k
SecondBite is a charity based in Australia, whose objective is to rescue and deliver nutritious food free of charge to those in need. SecondBite has separate operating divisions: one for the collection of food from the charity partners and Coles retail stores, and another one for the delivery of the nutritious food collected to the locations where people in need are. The direct monthly costs of the two operating divisions are respectively $489,860 for ‘food collection’ and $998,270 for ‘food delivery’.
SecondBite benefits from two support departments: one monitors the quality and selection of nutritious food collected from SecondBite’s charity partners. It also checks the conditions of storage of such food in the trucks during travelling time and contributes to design and implement checks on the quality, timing and reliability of the data processed through the dashboards (‘quality control’). The other support department is tasked with the implementation of dashboards, and with the equipment of the fleet of vehicles with tracking, safety and security technological devices, which would also allow to track the quality of the food storage conditions during travelling time (‘information systems’).
Table 1. the support departments’ costs to the operating departments of SecondBite using the direct method, and , based on the step-down method.
Questions:
- How could you have ranked the support departments differently? Show all calculations and explain your choice.
- From the perspective of the ‘food collection’ operating department, which is accountable to SecondBite charity partners, which one of the costs allocation methods applied in a), b) or c) would you suggest and why? (Use the results of your calculations to support your advice).
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