25) Managerial Financial Accounting Assignments AP6-6(a) Solution

25) Managerial Financial Accounting Assignments AP6-6(a) Solution

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AP6-6 (a)
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Correct. Allocating Service Department Costs [LO 3] World Airlines has three service departments: (1) ticketing, (2) baggage handling, and (3) engine maintenance. The service department costs are estimated for separate cost pools formed by department and are allocated to two revenue-producing departments: (1) domestic flights and (2) international flights. World does not differentiate between fixed and variable costs in making allocations. The following data relate to the allocations: Budgeted Data Costs Air Miles Ticketing $5,051,000 Baggage handling $3,403,000 Engine maintenance $7,120,000 Domestic flights 6,805,200 International flights 27,220,800 Allocate the service department costs to the revenue-producing departments using air miles as
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Unformatted text preview: the allocation base. Allocated to Domestic International Total $ 3,114,800 $ 12,459,200 Click here if you would like to Show Work for this question AP6-6 (a) 20 percent of air miles are by Domestic (6,805,200 miles 34,026,000 miles) and International flights accounts for 80 percent of the total air miles. Therefore, Domestic flights will be allocated 20 percent of the service departments' costs and International will be allocated 80 percent. Allocated to Costs Domestic International Ticketing $5,051,000 $1,010,200 $4,040,800 Baggage handling 3,403,000 680,600 2,722,400 Maintenance 7,120,000 1,424,000 5,696,000 Total $15,574,000 $3,114,800 $12,459,200...
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This note was uploaded on 06/21/2011 for the course MANAGERIAL MT425 taught by Professor Hodgson,k during the Spring '11 term at Kaplan University.

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25) Managerial Financial Accounting Assignments AP6-6(a) Solution

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