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In: Accounting

Samson Trust Company operate two departments (Annuity and Insurance). The company incurs estimated computer service costs...

Samson Trust Company operate two departments (Annuity and Insurance). The company incurs estimated computer service costs of 272000 each year. Samson Trust Company wants to allocate the annual cost among the departments. Two possible allocation bases would be number of employees or annual revenues. Annuities Insurance Total Revenues 232200 1127800 1360000 Number of employees 27 69 96 Assume Samson Trust Company chooses number of employees as the allocation base. Compute the allocation rate that Samson Trust Company will use. Round the rate to the nearest penny for your answer. USE THE ROUNDED RATE IN THIS ANSWER BOX in other calculations. How much computer services costs will estimated as related to the Annuities Department using this method? Round your answer to the nearest dollar.

Solutions

Expert Solution

Allocation rate = Estimated cost/Estimated no of employees = 272000/96 = 2833.33 per employee

Computer service costs related to Annuities department = 27*2833.33 = $76500

So answer is $76500

ekkarill92 answered 2 years ago
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