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Problem 4 in Accounting

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Question;Problem 4Blondell Legal Services, LLC, uses the step-down method to allocate service departmentcosts to operating departments. The firm has two service departments, Personnel andInformation Technology (IT), and two operating departments, Family Law and CorporateLaw. Data concerning those departments follow:Service DepartmentDepartmental costsEmployeesPCsPersonnel$85,2841112IT$29,7032526Operating DepartmentFamilyCorporateLawLaw$883,360$189,010121163112137Personnel costs are allocated first on the basis of employees and IT costs are allocatedsecond on the basis of PCs.RequirementsAssuming the Personnel Department provides the greatest service, determine the costs inthe operating departments by the step method of allocation.Assuming the Personnel Department provides the greatest service, determine the costs inthe operating departments by the direct, step and reciprocal method of allocation.Direct MethodService Department Operating DepartmentPersonnelITFamily Law Corporate LawTotalService Department Operating DepartmentPersonnelITFamily Law Corporate LawTotalService Department Operating DepartmentPersonnelITFamily Law Corporate LawTotalTotal costs after allocationStep MethodTotal costs after allocationReciprocal MethodTotal costs after allocation

 

Paper#41340 | Written in 18-Jul-2015

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