12-59 excel problem week 5 - administrative costs....

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Pr Da Cost Allocations from Service M Personnel Administrative Direct Departmental Costs $70,000 $90,000 Number of Employees 6 10 Direct Method: Direct Departmental Costs $70,000 $90,000 Personnel Allocation (70,000) (90,000) Administrative Allocation Total Costs $- $- Step-Down Method Direct Departmental Costs $70,000 $90,000 Step 1 - Personnel Allocation (70,000) 10,000 Step 2 - Administrative Allocation (100,000) Total Costs $- $- Total Costs: Residential Direct Method $336,000 Total Costs: Commercial Direct Method $464,000 Total Costs: Residential Step-Down Method: $309,750 Total Costs: Commercial Step-Down Method: $480,250 I would choose the direct method. The number of employees carried within a department adds to the costs to be recognized. If the Step method is chosen, the department with less employees is forced to
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Unformatted text preview: administrative costs. Administrative costs include insurance, accounting and general management. A the more insurance and management needed. This is why I think the step-down method would be unf division because of the higher costs and less employees. roblem: 12-59 allas Cleaning e Departments to Producing Departments May 30, 2010 Residential Commercial Total Res/Comm $240,000 $400,000 $640,000 36 24 60 70 $240,000 $400,000 42,000 28,000 54,000 36,000 $336,000 $464,000 $240,000 $400,000 36,000 24,000 33,750 56,250 $309,750 $480,250 e overall carry more Although an The more employees fair to the commercial Total Admin/Res/Comm Grand Total $800,000...
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This note was uploaded on 06/04/2010 for the course BUSINESS M ACC561 taught by Professor Johnson during the Spring '10 term at University of Phoenix.

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12-59 excel problem week 5 - administrative costs....

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