Question
In: Accounting
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International....
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows: Administration Accounting Domestic International Employees – 28 36 36 Transactions 38,000 – 20,000 80,000 Department direct costs $ 363,000 $ 141,000 $ 955,000 $ 3,750,000
Allocate the cost of the service departments to the operating departments using the reciprocal method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)
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Expert Solution
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| Reciperocal Mathod | To | |||||
| Admin | Accounting | Domestic | International | |||
| From | ||||||
| Department Cost | $ 363,000 | $ 141,000 | $ 955,000 | $ 3,750,000 | ||
| Administration | $ 1 | $-435,400 | $ 121,912 | $ 156,744 | $ 156,744 | |
| Accounting | in Accounting ratio | $ 72,400 | $ -263,296 | $ 38,159 | $ 152,737 | R/off |
| Total | $ -0 | $ -384 | $1,149,903 | $ 4,059,481 | ||
| Admin | Accounting | |||||
| Admin | $ 363,000 | 27.54% | ||||
| Accounting | $ 141,000 | 28.00% | ||||
| Dom | $ 955,000 | 36.00% | 14.49% | |||
| Int | $ 3,750,000 | 36.00% | 57.97% | |||
| Admin= | 363000+0.2754 of Accounting | Eq1 | ||||
| Accounting= | 141000+0.28 of Admin | Eq2 | ||||
| Substituting the value of Accounting in Eq1 | ||||||
| Admin= | 363000+0.2754(141000+0.28 of Admin) | |||||
| Admin= | 363000+38831+0.0771 of admin | $ 38,831.40 | 0.0771 | |||
| Admin-0.0771 Admin= | $ 401,831 | $ 401,831 | ||||
| 0.9229 Admin | $ 401,831 | 0.9229 | ||||
| Admin= | 401831/0.9229 | |||||
| Admin= | $ 435,400 | |||||
| Substituting the value of Admin in Eq 2 | ||||||
| Accounting= | 141000+0.28 of Admin | |||||
| Accounting= | 141000+(0.28*436773) | |||||
| Accounting= | $ 263,296 | |||||
ekkarill92 answered 2 years agoRelated Solutions
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International....
BluStar Company has two service departments, Administration and
Accounting, and two operating departments, Domestic and
International. Administration costs are allocated on the basis of
employees, and Accounting costs are allocated on the basis of
number of transactions. A summary of BluStar operations
follows.
Administration
Accounting
Domestic
International
Employees
–
21
46
33
Transactions
35,000
–
18,000
72,000
Department
direct costs
$
361,000
$
142,000
$
950,000
$
3,680,000
Required:
a. Allocate the cost of the service departments
to the operating...
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International....
BluStar Company has two service departments, Administration and
Accounting, and two operating departments, Domestic and
International. Administration costs are allocated on the basis of
employees, and Accounting costs are allocated on the basis of
number of transactions. A summary of BluStar operations
follows.
Administration
Accounting
Domestic
International
Employees
—
25
15
60
Transactions
50,000
—
10,000
40,000
Department direct costs
$
58,000
$
24,500
$
159,750
$
597,000
BluStar estimates that the cost structure in its operations is as
follows....
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International....
BluStar Company has two service departments, Administration and
Accounting, and two operating departments, Domestic and
International. Administration costs are allocated on the basis of
employees, and Accounting costs are allocated on the basis of
number of transactions. A summary of BluStar operations
follows.
Administration Accounting Domestic
International
Employees – 30 40 30
Transactions 36,000 – 19,000 76,000
Dept direct costs $ 359,000 $ 146,000 $ 930,000
$ 3,720,000
Required:c. Allocate the cost of...
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International....
BluStar Company has two service departments, Administration and
Accounting, and two operating departments, Domestic and
International. Administration costs are allocated on the basis of
employees, and Accounting costs are allocated on the basis of
number of transactions. A summary of BluStar operations
follows.
Administration
Accounting
Domestic
International
Employees
–
29
49
22
Transactions
36,000
–
19,000
76,000
Department direct costs
$
357,000
$
147,000
$
945,000
$
3,650,000
Required:
a. Allocate the cost of the service departments
to the operating...
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International....
BluStar Company has two service departments, Administration and
Accounting, and two operating departments, Domestic and
International. Administration costs are allocated on the basis of
employees, and Accounting costs are allocated on the basis of
number of transactions. A summary of BluStar operations
follows:
Administration
Accounting
Domestic
International
Employees
–
26
49
25
Transactions
30,000
–
23,000
92,000
Department direct costs
$
351,000
$
146,000
$
945,000
$
3,680,000
Required:
a. Allocate the cost of the service departments
to the operating...
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International....
BluStar Company has two service departments, Administration and
Accounting, and two operating departments, Domestic and
International. Administration costs are allocated on the basis of
employees, and Accounting costs are allocated on the basis of
number of transactions. A summary of BluStar operations
follows.
Administration
Accounting
Domestic
International
Employees
–
28
51
21
Transactions
32,000
–
19,000
76,000
Department direct costs
$
358,000
$
149,000
$
935,000
$
3,560,000
Required:
a. Allocate the cost of the service departments
to the operating...
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International....
BluStar Company has two service departments, Administration and
Accounting, and two operating departments, Domestic and
International. Administration costs are allocated on the basis of
employees, and Accounting costs are allocated on the basis of
number of transactions. A summary of BluStar operations
follows:
Administration
Accounting
Domestic
International
Employees
—
25
15
60
Transactions
50,000
—
10,000
40,000
Department direct costs
$
54,000
$
26,500
$
159,250
$
596,000
BluStar estimates that the cost structure in its operations is as
follows:...
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International....
BluStar Company has two service departments, Administration and
Accounting, and two operating departments, Domestic and
International. Administration costs are allocated on the basis of
employees, and Accounting costs are allocated on the basis of
number of transactions. A summary of BluStar operations
follows:
Administration
Accounting
Domestic
International
Employees
–
21
44
35
Transactions
34,000
–
19,000
76,000
Department direct costs
$
359,000
$
144,000
$
935,000
$
3,780,000
Required:
a. Allocate the cost of the service departments
to the operating...
Andy Corp. has two service departments and two operating departments. The company allocates service departmental costs...
Andy Corp. has two service departments and two operating
departments. The company allocates service departmental costs to
operating departments using the step-down method. Operating data
for these departments for last year are as follows: Service
Departments Operating Departments Personnel Maintenance Assembly
Machining Departmental costs $144,000 $84,000 $12,000 $34,000
Number of employees 35 30 90 60 Machine-hours 0 0 330 170 Personnel
costs are allocated first on the basis of number of employees and
Maintenance costs are allocated second on the...
Andy Corp. has two service departments and two operating departments. The company allocates service departmental costs...
Andy Corp. has two service departments and two operating
departments. The company allocates service departmental costs to
operating departments using the step-down method. Operating data
for these departments for last year are as follows:
Service Departments
Operating Departments
Personnel
Maintenance
Assembly
Machining
Departmental costs
$144,000
$84,000
$12,000
$34,000
Number of employees
35
30
90
60
Machine-hours
0
0
210
290
Personnel costs are allocated first on the basis of number of
employees and Maintenance costs are allocated second on the...
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