The following matrix, illustrates each support department’s cost and how it spends its time: Support Department User of...

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Finance

The following matrix, illustrates each support department’s costand how it spends its time:
Support Department
User of Support
Service
Personnel
Accounting &
Administration
Marketing
Fleet
Operations
Personnel
5%
Accounting & Administration
5%
8%
Marketing
10%
10%
Fleet Operations
5%
10%
Gardening Center
15%
25%
40%
7%
Landscaping
25%
30%
30%
40%
Lawn Care
40%
20%
30%
45%
TOTAL COST
$50,000
$80,000
$240,000
$200,000
Using the step-down method of support department costallocation, determine the total support cost allocated to eachoperating department. Allocate costs in the following order:A&A, Personnel, Fleet Operations, Marketing.
Explain why the order of allocation given in part 1, above, mayhave been chosen.

Answer & Explanation Solved by verified expert

3.8 Ratings (391 Votes)

AA Personnel Fleet Operations Marketing Gardening Center Landscaping Lawn Care Total 80000 50000 200000 240000 570000 Allocation of AA costs in the ratio of 51010253020 80000 4000 8000 8000 20000 24000 See Answer

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Transcribed Image Text

The following matrix, illustrates each support department’s costand how it spends its time:Support DepartmentUser of SupportServicePersonnelAccounting &AdministrationMarketingFleetOperationsPersonnel5%Accounting & Administration5%8%Marketing10%10%Fleet Operations5%10%Gardening Center15%25%40%7%Landscaping25%30%30%40%Lawn Care40%20%30%45%TOTAL COST$50,000$80,000$240,000$200,000Using the step-down method of support department costallocation, determine the total support cost allocated to eachoperating department. Allocate costs in the following order:A&A, Personnel, Fleet Operations, Marketing.Explain why the order of allocation given in part 1, above, mayhave been chosen.

	Support Department
User of Support Service	Personnel	Accounting & Administration	Marketing	Fleet Operations
Personnel		5%
Accounting & Administration	5%			8%
Marketing	10%	10%
Fleet Operations	5%	10%

Gardening Center	15%	25%	40%	7%
Landscaping	25%	30%	30%	40%
Lawn Care	40%	20%	30%	45%

TOTAL COST	$50,000	$80,000	$240,000	$200,000