I-23.04 Problem

I-23.04 Problem - Maintenance 1,000 4 1 225,000 Food...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
I-23.04 Form a seven-person team. Each team member should assume the role of supervisor for one of the following seven units of Wilson Publishing: Maintenance Food Services Information Technology Design Printing Binding Warehousing Wilson Printing's four productive units are supported by three service departments: Maintenance, Food Services, and Information Technology. Maintenance costs are allocated to other units based on square footage, food services costs are allocated to other units based on number of employees, and information technology costs are allocated to other units based on number of PCs in use. Below is a listing of data for each unit: Square Footage Employees PCs in Use Direct Costs Design 2,400 4 6 400,000 $ Printing 6,000 8 9 1,800,000 Binding 3,000 3 2 650,000 Warehousing 9,000 3 3 180,000
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Maintenance 1,000 4 1 225,000 Food Services 3,000 2 1 260,000 Information Technology 1,000 3 6 190,000 Each service department supervisor should prepare a cost allocation of their costs to other units, using both a direct and a step allocation approach. It is agreed that the step allocations would occur in the following order: (a) Maintenance, (b) Food Services, and (c) Information Technology. Each production supervisor should calculate their total costs under both approaches. The team should then discuss the merits of both allocation methods, and see if a consensus can be reached. Discuss whether the amount of cost allocation varies between the two approaches, and if this influences the debate about which method should be used....
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online