Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East)….

Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West and East)….

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Memorial Services, Incorporated (MSI) has three service departments (IT, Accounting, and HR) and two production departments (West
and East). The usage data for each of the service departments for the previous period follow:
IT
Accounting
HR
IT

Accounting allocation
Total costs allocated
0%
10%
Service department costs
HR allocation
IT allocation
Accounting
0%
10%
The direct costs of the service departments in the previous period were $88,500 for IT, $106,000 for Accounting, and $130,000 for HR.
Required:
Use the step method to allocate the service department costs to the two production departments. Allocate HR costs first, followed by
IT, and then Accounting.
Note: Amounts to be deducted should be indicated by a minus sign.
$
HR
20%
0%
IT
West East
40%
40%
60%
20%
40%
60%
0 $
Accounting
0 $
HR
0
$
West
0 $
East
0

Expert Answer:

Answer rating: 100% (QA)

To allocate the service department costs to the two production departments using the step method Ste
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