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    Acc123 Service-Allocation

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    Yuki Grace
    The document presents four methods for allocating costs across departments - Direct, Step, and Algebraic. The Direct Method allocates costs based on predetermined percentages. The Step Method allocates costs in stages across departments. The Algebraic Method sets up algebraic equations to solve for allocations. All methods allocate costs from service departments like Library and Computing Services to producing departments like School of Business and School of Health.

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    Acc123 Service-Allocation

    Uploaded by

    Yuki Grace
    17 views4 pages
    The document presents four methods for allocating costs across departments - Direct, Step, and Algebraic. The Direct Method allocates costs based on predetermined percentages. The Step Method allocates costs in stages across departments. The Algebraic Method sets up algebraic equations to solve for allocations. All methods allocate costs from service departments like Library and Computing Services to producing departments like School of Business and School of Health.

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    Service Allocation

    Original Title

    ACC123_SERVICE-ALLOCATION

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    The document presents four methods for allocating costs across departments - Direct, Step, and Algebraic. The Direct Method allocates costs based on predetermined percentages. The Step Method allocates costs in stages across departments. The Algebraic Method sets up algebraic equations to solve for allocations. All methods allocate costs from service departments like Library and Computing Services to producing departments like School of Business and School of Health.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    17 views4 pages

    Acc123 Service-Allocation

    Uploaded by

    Yuki Grace
    The document presents four methods for allocating costs across departments - Direct, Step, and Algebraic. The Direct Method allocates costs based on predetermined percentages. The Step Method allocates costs in stages across departments. The Algebraic Method sets up algebraic equations to solve for allocations. All methods allocate costs from service departments like Library and Computing Services to producing departments like School of Business and School of Health.

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    of 4

    DIRECT METHOD

    ADMIN BACS ACCTG OTHERS


    180,000.00 90,000.00 190,000.00 900,000.00
    (180,000.00) - 36,000.00 144,000.00
    - (90,000.00) 13,500.00 76,500.00
    49,500.00 220,500.00

    ALLOCATION FOR ADMIN:


    ACCTG= 180000*20/100
    OTHERS= 180000*80/100

    ALLOCATION FOR BACS:


    ACCTG= 90000*18/120
    OTHERS= 90000*102/120

    DIRECT METHOD
    SERVICE DEPT PRODUCING DEPT
    Library Computing School of School of
    Services Business Health
    Departmental costs
    800,000.00 1,800,000.00 - -
    Allocated cost (800,000.00) - 188,235.00 611,765.00
    - (1,800,000.00) 1,200,000.00 600,000.00
    TOTAL - - 1,388,235.00 1,211,765.00

    ALLOCATION FOR LIBRARY:


    SOB = 800,000 * 20/85
    SOH = 800,000 * 65/85

    ALLOCATION FOR COMPUTING SERVICES:


    SOB = 1,800,000 * 60/90
    SOH = 1,800,000 * 30/90
    STEP METHOD
    SERVICE DEPT PRODUCING DEPT
    ADMIN BACS ACCTG OTHERS
    180,000.00 90,000.00 190,000.00 900,000.00
    (180,000.00) 8,571.00 34,286.00 137,143.00
    (98,571.00) 14,786.00 83,785.00
    49,072.00 220,928.00

    ALLOCATION FOR ADMIN:


    ACCTG= 180000*20/105
    OTHERS= 180000*80/105
    BACS= 180000*5/105

    ALLOCATION FOR BACS:


    ACCTG= 98571*18/120
    OTHERS= 98571*102/120

    STEP METHOD
    SERVICE DEPT PRODUCING DEPT
    Library Computing School of Business School of Health
    Services
    Departmental costs
    800,000.00 1,800,000.00 - -
    Allocated cost 180,000.00 (1,800,000.00) 1,080,000.00 540,000.00
    (980,000.00) - 230,588.00 749,412.00
    TOTAL - - 1,310,588.00 1,289,412.00

    ALLOCATION FOR COMPUTING SERVICES:


    SOB = 1,800,000 * 60%
    SOH = 1,800,000 * 30%
    LIB = 1,800,000 * 10%

    ALLOCATION FOR LIBRARY:


    TOTAL COST = 800,000+180,000

    SOB = 980,000 * 20/85


    SOH = 980,000 * 65/85
    ALGEBRAIC METHOD
    SERVICE DEPT PRODUCING DEPT
    Library Computing School of School of
    Services Business Health
    Departmental costs
    800,000.00 1,800,000.00 - -
    Allocated cost (994,923.86) 149,238.58 ######### #########
    194,923.86 (1,949,238.58) ######### #########
    TOTAL - - ######### #########

    ALLOCATION FOR LIBRARY:


    SOB = 994,923.86 * 20%
    SOH = 994,923.86 * 65%
    CS = 994,923.86* 15%

    ALLOCATION FOR COMPUTING SERVICES:


    SOB = 1,949,238.58 * 60%
    SOH = 1,949,238.58 * 30%
    LIB = 1,949,238.58 * 10%
    Library = 800,000 + 0.10 CS
    Computing = 1,800,000 + 0.15 L

    Solve for Library:


    Library = 800,000 + 0.10 CS
    L = 800,000 + 0.10 (1,800,000 + 0.15L)
    L = 800,000 + 180,000 + 0.015L
    L - 0.015L = 800,000 + 180,000
    0.985 L = 980,000
    = 980000 / 0.985
    = #########

    Solve for Computing services:


    Computing = 1,800,000 + 0.15 L
    = 1,800,000 + 0.15 (994,923.86)
    = #########

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