exercise4.1 - AC2720 Module 4 Cost Allocation Exercise 4.1...

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AC2720: Module 4 Cost Allocation Exercise 4.1 Allocation of Support and Revenues 1 There are three problems in this assessment. You need to complete all the three problems. Problem 1: Direct and Step-Down Allocation E-books, an online book retailer, has two operating departments corporate sales and consumer sales and two support departments human resources and information systems. Each sales department conducts merchandising and marketing operations independently. E-books uses number of employees to allocate human resources costs and the processing time to allocate information systems costs. The following data is available for September 2013: Answer the following questions: 1. Allocate the support departments’ costs to the operating departments, using the direct method . 2. Rank the support departments, based on the percentage of their services provided to other support departments. Use this ranking to allocate the support departments’ costs to the operating departments, based on the step-down method.
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