1. Using the direct allocation method, allocate costs to the revenue centers. 2. Using the step-down method, allocate costs to the revenue centers.

profilerusyst

 

 

     Allocation Statistics  
          
Cost Centers Direct Costs ($) Maintenance Hrs of Serv. (%)Telecom. # of Phones (%) 
Nonrevenue         
 Maintance 80,000   5  
 Telecomunications40,000 15    
          
Revenue          
 Per Diem 900,000 40 90  
 OR 300,000 45 5  
          
Total Costs   1,320,000 100 100  
          

 

 Use the information provided in table 4-6 to answer the questions below: 

1. Using the direct allocation method, allocate costs to the revenue centers. 

2. Using the step-down method, allocate costs to the revenue centers. 

 

3. Analyze the results of the two allocation methods. Do they differ? Why? Which one would you recommend? 

  • 7 years ago
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