10.

37 (40 min) Cost allocation; step method

Cost allocation bases in other service departments
Building Human Designs & % of base in other service
occupancy resources patterns Total base departments
Building occupancy - 8,100 3,900 81,000 14.8%
Human resources 3 - 6 60 15.0%
Design & patterns - - - 60 0.0%
By a very small margin, Human Resources is the more general service department and
Building Occupancy is second.

Building Human Design & Shirt-

occupancy Resources patterns S3 making Printing Sales
Allocation of service costs S1 S2 P1 P2 P3 Total

Amount of HR base 3 - 6 30 15 6 60
Proportion of HR base 0.05 0.10 0.50 0.25 0.10 1.00
Allocation of HR cost $ 1,000 $(20,000) $ 2,000 $10,000 $ 5,000 $ 2,000 $ -
Amount of Building occupancy base 0 0 3,900 27,000 36,000 6000 72,900
Proportion of Building occupancy - - 0.0535 0.3704 0.4938 0.0823 1.00
base
Building occupancy direct cost $ 45,000
Allocation of adjusted Building $ (46,000) $ 2,461 $17,037 $ 22,716 $ 3,786 $ -
occupancy cost
Amount of Design & patterns base - - - 15 40 5 60
Proportion of Designs & patterns - - - 0.25 0.6667 0.0833 1.00
base
Design & patterns direct cost $10,000
Allocation of adjusted Designs & $ (14,461) $ 3,615 $ 9,641 $ 1,205 $ -
patterns -
Total allocated service costs to jobs $30,652 $ 37,357 $ 6,991 $75,000

EXCEL SOLUTIONS ARE FOUND IN EXCEL SOLUTIONS FILE