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Question: state financial corp has three service departments administration communications and...

Question details

State Financial Corp. has three service departments (Administration, Communications, and Facilities), and two production departments (Deposits and Loans). A summary of costs and other data for each department prior to allocation of service department costs for the year ended December 31 follows:

Administration Communications Facilities Deposits Loans
Direct costs $ 200,000 $ 300,000 $ 254,000 $ 8,000,000 $ 5,000,000
Employee-hours 24,800 33,600 21,600 450,000 350,000
Number of employees 9 15 6 210 150
Square footage occupied 4,900 13,440 5,600 246,400 201,600

The costs of the service departments are allocated on the following bases: Administration, employee-hours; Communications, number of employees; and Facilities, square footage occupied. (Do not round intermediate calculations. )

Required:

a. Assume that the bank elects to distribute service department costs to production departments using the direct method. What amount of Communications Department costs is allocated to the Deposits Department?

b. Assume the same method of allocation as in requirement (a). What amount of Administration Department costs is allocated to the Loans Department?

c. Assuming that the bank elects to distribute service department costs to other departments using the step method (starting with Facilities and then Communications), what amount of Facilities Department costs is allocated to the Communications Department?

d. Assume the same method of allocation as in requirement (c). What amount of Communication Department costs is allocated to Facilities?

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