Finally-it was year-end, so Debra could look over the costs in her company’s three key operating segments (Toys, Tools,…

Finally-it was year-end, so Debra could look over the costs in her company’s three key operating segments (Toys, Tools,…

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Finally-it was year-end, so Debra could look over the costs in her company’s three key operating segments (Toys, Tools, and
Treasures). This was her first year taking an evaluative role in the accounting department, so she didn’t want to miss anything. She
could clearly trace where each operating department’s own costs came from, but she was having trouble understanding the support
department costs. It looked as if somebody had done an allocation of sorts, but there was very little back-up information to verify the
calculations. The final costs for the operating segments, as Debra found them, are as follows.
Operating costs
Legal costs
HR costs
Total costs
(b)
Tools
$557,000
33,900
51,300
25,650
$527,500 $616,550
Toys
$431,000
HR
45,200
Treasures
$397,000
Debra also found one other document that showed total costs in Legal of $113,000 and total costs in HR of $80,000. This was a
curious finding, as neither the total allocated Legal costs nor the total allocated HR costs agreed with these amounts.
11,300
25,650
$433,950
Determine the proportion of each cost that was allocated to each department.
For Legal Toys
Tools
Treasures
For HR
Toys
Tools
Treasures

Expert Answer:

Answer rating: 100% (QA)

To determine the proportion of each cost that was allocated to each department we need to calculate
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