Original costBilling hours usedNumber of employeesIT hours used(a)$Support DepartmentsBilling$70,000 $119,000AuditYour answer is incorrect.2100HR$2200IT$95,000Tax1200Operating DepartmentsAuditOperating Divisions$558,000$2,00012900TaxAdvisory$837,000 $298,0001,40015Advisory600600Rank the three support departments by their original costs, and then allocate the support department costs using the stepmethod. (Round intermediate calculations to 4 decimal places, e.g. 15.2516 and final answers to 2 decimal places, e.g. 15.25.)3300$Totals$1,977,0004,000352,300Total As the managing partner of Swifty Accounting Services, Adam is trying to compare the profitability results of the firm's three different business lines: Audit, Tax, and Advisory Services. These three operating divisions are supportedby three support departments: Billing, Human Resources, and IT. The cost drivers (or allocation bases) for each of the support departments, along with each department's usage of those services and its own original costs, are asfollows. 1) Rank the three support departments by their original costs, and then allocate the support department costs using the step method. (Round intermediate calculations to 4 decimal places, e.g. 15.2516 and final answersto 2 decimal places, e.g. 15.25.) 2) Rank the three support departments based on the percentage of their service provided to other support departments, and then allocate their costs using the step method. (Round intermediatecalculations to 4 decimal places, eg. 15.2516 and final answers to 2 decimal places, eg 15.25)

Lets understand the basics.Cost allocation can be done using,(1) Direct method(2) Step down method…

Answered: riginal cost lling hours used umber of…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 2CMA

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riginal cost lling hours used umber of employees hours used Billing $70,000 $119,000 2 HR 100 2 200 IT $95,000 1 200 Advisory $558,000 $837,000 $298,000 Audit 2,000 12 900 Tax 1,400 15 600 600 3 300 Totals $1,977,000 4,000 35 2,300