World Airlines has three service departments: (1) ticketing, (2) baggage handling, and (3) engine maintenance. The service department costs are estimated for separate cost pools formed by department and are allocated to two revenue-producing departments: (1) domestic flights and (2) international flights. World does not differentiate between fixed and variable costs in making allocations. The following data relate to the allocations:
|
|
Budgeted Data |
|
|
|
Costs |
|
Air Miles |
|
| Ticketing |
|
$4,352,000 |
|
|
|
| Baggage handling |
|
$3,144,000 |
|
|
|
| Engine maintenance |
|
$4,896,000 |
|
|
|
| Domestic flights |
|
|
|
7,562,500 |
|
| International flights |
|
|
|
22,687,500 |
|
Allocate the service department costs to the revenue-producing departments using air miles as the allocation base.
|
|
Allocated to |
|
|
|
Domestic |
|
International |
|
| Ticketing |
|
$ |
|
$ |
|
| Baggage handling |
|
|
|
|
|
| Maintenance |
|
|
|
|
|
|
Total |
|
$ |
|
$ |