Part A. Wollongong Credit Centre (WCC) provides loan to two
types of clients; individuals and corporate client. WCC has two
support departments: IT Support (IT) and Admin Support (Admin)
department. In addition, WCC has two operation departments to deal
with its two distinct clients named Individual clients and
corporate clients department. For the next quarter, the following
cost record including budgeted cost of support department to be
allocated to operating department is as follows: Support Department
Operation Department IT Admin Individual Corporate Total Budgeted
costs $ 1,200,000 1,500,000 7,500,000 8,000,000 18,200,000 Support
work supplied by IT 25% 40% 35% 100% Support work supplied by Admin
10% 30% 60% 100% Required (show your workings):
(a) Using the direct method, determine the amount of support department costs will be allocated to the two operation departments
(b) Using the step-down method, determine the amount of support department costs will be allocated to the two operation departments if the Admin department with the highest amount is allocated first.
(c) Compare and explain differences in the support-department allocated to each operation department.
(a) Using the direct method, determine the amount of support department costs will be allocated to the two operation departments
(b) Using the step-down method, determine the amount of support department costs will be allocated to the two operation departments if the Admin department with the highest amount is allocated first.
(c) Compare and explain differences in the support-department allocated to each operation department.
