BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and...
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Accounting
BluStar Company has two service departments, Administration and Accounting, and two operating departments, Domestic and International. Administration costs are allocated on the basis of employees, and Accounting costs are allocated on the basis of number of transactions. A summary of BluStar operations follows:
Administration
Accounting
Domestic
International
Employees
22
41
37
Transactions
35,000
19,000
76,000
Department direct costs
$
352,000
$
143,000
$
955,000
$
3,610,000
Required:
a. Allocate the cost of the service departments to the operating departments using the direct method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)
b. Allocate the cost of the service departments to the operating departments using the step method. Start with Administration. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)
c. Allocate the cost of the service departments to the operating departments using the reciprocal method. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.)
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