Beckett works for Coronado Inc., which produces stuffed animals and dolls in the likeness of customers' pets or loved ones. This way, they can always be together, even when they're apart.
To make sure the full cost of making and selling these products is correctly determined, Beckett must carefully assign the support department costs to the operating departments. At the end of the year, these costs are compared to revenues from each segment for profitability analysis. If product categories did not generate as much profit margin as management had hoped, then selling prices and costs are adjusted to manage the margins for next year. Here is the information he has gathered:
Total support department costs: HR $; Legal, $
Total costs in the Animals segment are $ while total costs in the Dolls segment are $
HR provides support to Legal, in addition to the Animals and Dolls segments: and respectively. Legal also provides support to HR and to the Animals and Dolls segments: and respectively. QUESTION:
Determine the total cost in each operating department after allocating support cost using the step method parentheses rank support departments by the percentage of service they provide to the other support department.
