Assignment
Billy Stone, Inc., 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 - 0.35 0.40
Actual cost data for each department are:
Fixed Variable
Buildings & Grounds $ 50,000 $90,000
Computer Services $100,000 $21,000
1. Total fixed costs allocated from Buildings & Grounds to the Signs Department, using the preferred allocation basis, by the direct allocation method are
a. $37,500.
2. Total variable costs allocated from Computer Services to Mailers Department, using the preferred allocation basis, by the step-down allocation method (begin with Building & Grounds) are
c. $16,000.
3. The equation to determine the total variable costs of Computer Services using the preferred allocation basis, for the reciprocal allocation method is
d. CS = $21,000 + 0.10 B&G.