Question

Quinlan Trust Corporation has two service departments: actuary and economic analysis. Quinlan also has three operating departments: annuity, fund management, and employee benefit services. The annual costs of operating the service departments are $480,000 for actuary and $800,000 for economic analysis. Quinlan uses the direct method to allocate service center costs to operating departments. Other relevant data follow:

	Operating Costs*			Revenue
Annuity	$	500,000		$	840,000
Fund management		900,000			1,260,000
Employee benefit services		600,000			1,100,000

*The operating costs are measured before allocating service center costs.

Required

1. Use operating costs as the cost driver for allocating service center costs to operating departments.

2. Use revenue as the cost driver for allocating service center costs to operating departments.

Answer 1

last word in above is total

EBS - employee benefit services

Mgt.- management