Problem: Company has two production departments: D and J. Stephanie also has 3 service departments: Personnel, Administration, and Shipping. Shipping costs are allocated on the basis of number of packages, while Personnel and Administration costs are allocated using number of employees. Assume that the ranking of the benefits provided is in the order listed below.
|
Department
|
Costs
|
Employees
|
# of Packages
|
|
Personnel
|
$600,000
|
25
|
7,000
|
|
Administration
|
800,000
|
20
|
9,000
|
|
Shipping
|
700,000
|
12
|
27,500
|
|
D
|
500,000
|
10
|
5,000
|
|
J
|
400,000
|
15
|
6,000
|
1. Using the direct method, what amount of personnel costs is allocated to Department J (rounded to the nearest $)?
2. Using the step method, what amount of Administration costs is allocated to Department D (rounded to the nearest $)?
3. Using the step method, what amount of Personnel costs is allocated to Department J (rounded to the nearest $)?