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3) Data Master is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Moore is considering three different methods of allocating overhead costs: the direct method, the step method, and the reciprocal method. Moore assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department. Budgeted Overhead Service Departments User Departments Facilities Computer Consulting Training Program 75,000 $110,000 $ 85,000 $ Info Systems (hours) Facilities 200,000 (Square feet) Info Systems $ 50,000 $ 25,000 $ Direct Cost Info System Facilities Total 400 1,100 600 900 Computer Program Foo Total 400,000 600,000 800,000 2,000,000 Information systems are allocated on the basis of hours of computer usage; facilities are allocated on the basis of floor space. 345,000 Required: Allocate the service department costs to the user departments using the reciprocal method. Round to the nearest whole dollar. Info Systems Facilities 3,000 Consulting Training

3) Data Master is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Moore is considering three different methods of allocating overhead costs: the direct method, the step method, and the reciprocal method. Moore assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department. Budgeted Overhead Service Departments User Departments Facilities Computer Consulting Training Program 75,000 $110,000 $ 85,000 $ Info Systems (hours) Facilities 200,000 (Square feet) Info Systems $ 50,000 $ 25,000 $ Direct Cost Info System Facilities Total 400 1,100 600 900 Computer Program Foo Total 400,000 600,000 800,000 2,000,000 Information systems are allocated on the basis of hours of computer usage; facilities are allocated on the basis of floor space. 345,000 Required: Allocate the service department costs to the user departments using the reciprocal method. Round to the nearest whole dollar. Info Systems Facilities 3,000 Consulting Training

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 4CE: Larsen, Inc., produces two types of electronic parts and has provided the following data: There are...
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3) Data Master is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Moore is considering three different methods of allocating overhead costs: the direct method, the step method, and the reciprocal method. Moore assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department. Budgeted Overhead Service Departments User Departments Info Systems Facilities Computer Consulting Training Program $ 50,000 $ 25,000 $75,000 $110,000 $85,000 $ 345,000 Info Systems (hours) Facilities 200,000 (Square feet) Direct Cost Info System Facilities Total 400 1,100 400,000 600 900 Computer Program the Information systems are allocated on the basis of hours of computer usage; facilities are allocated on the basis of floor space. Total 600,000 800,000 2,000,000 Required: Allocate the service department costs to the user departments using the reciprocal method. Round to the nearest whole dollar. Info Systems Facilities 3,000 Consulting Training
Transcribed Image Text:3) Data Master is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Moore is considering three different methods of allocating overhead costs: the direct method, the step method, and the reciprocal method. Moore assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department. Budgeted Overhead Service Departments User Departments Info Systems Facilities Computer Consulting Training Program $ 50,000 $ 25,000 $75,000 $110,000 $85,000 $ 345,000 Info Systems (hours) Facilities 200,000 (Square feet) Direct Cost Info System Facilities Total 400 1,100 400,000 600 900 Computer Program the Information systems are allocated on the basis of hours of computer usage; facilities are allocated on the basis of floor space. Total 600,000 800,000 2,000,000 Required: Allocate the service department costs to the user departments using the reciprocal method. Round to the nearest whole dollar. Info Systems Facilities 3,000 Consulting Training
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