In: Accounting
Zachary Trust Corporation has two service departments: actuary
and economic analysis. Zachary also has three operating
departments: annuity, fund management, and employee benefit
services. The annual costs of operating the service departments are
$668,200 for actuary and $1,002,300 for economic analysis. Zachary
uses the direct method to allocate service center costs to
operating departments. Other relevant data follow.
Operating Costs* | Revenue | |||||
Annuity | $ | 690,000 | $ | 681,000 | ||
Fund management | 1,090,000 | 1,380,000 | ||||
Employee benefit services | 790,000 | 1,280,000 | ||||
*The operating costs are measured before allocating service center costs.
Required
Use operating costs as the cost driver for allocating service center costs to operating departments.
Use revenue as the cost driver for allocating service center costs to operating departments.