Reference no: EM132818524

Question 1: KV Accounting and Business Consultants provides a variety of consulting services to a diverse range of clients. The company has three support departments and three revenue-generating departments, whose cost details for a typical quarter are presented below:

Support Departments

IT Support                   S 298,000

Admin Support                    734,000

Facilities Support               211,000

Revenue-Generating Departments

Assurance                        904,000

Tax Advisory                     650,000

Business Advisory                818,900

                                        53,615,900

The existing cost allocation system Is designed as follows: (1) the support department costs are allocated to the three revenue-generating departments, and (2) the revenue-generating department costs are allocated to individual clients. The support department costs are allocated to the revenue-generating departments as follows: (1) IT Support costs are allocated to Assurance. Tax Advisory. and Business Advisory using a 30:30:40 ratio. (2) Admin Support costs are allocated using a 50:20:30 ratio, and (3) Facilities Support costs are allocated using a 35:35:30 ratio. The costs accumulated in the three revenue-generating departments are allocated to individual clients based on the professional time consumed in the respective department. The Assurance, Tax Advisory, and Business Advisory departments recorded 11,000, 9,500, and 8,000 hours, respectively, for the quarter.

Required:
1. Compute the predetermined cost allocation rates for the three revenue-generating departments. (Round your answers to 2 decimal places.)

Question 2. Using the rates computed in Requirement (1) above, assign the costs to clients X and Y. Client X required 540, 680 and 800 hours of professional time, respectively, in the Assurance, Tax Advisory and Business Advisory departments, whereas client Y required 800, 950 and 400 hours of professional time. (Do not round intermediate calculations. Round your answers to the nearest whole

Question 3. You have recently learned about activity based costing and decide to use six activity cost pools. one for each department. The additional Information you have collected Is as follows:

Compute the predetermined allocation rate for each activity cost pool. (Round your answers to 2 decimal places.)

Question 4. In addition to the Assurance. Tax Advisory, and Business Advisory time specified in Requirement (2) above, the two clients consumed the following additional resources:

Resource                           Client X Client Y

IT time (hours)                                550      350

Sales revenue                         $1,494,000 $996,000

Assign the costs to the two clients using activity-based costing. (Round intermediate calculations to 2 decimal places and final

Attachment:- Group Assessment.rar