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Problem - Service department charges - The Kirkland Company has three central service departments: sales administration, credit, and human resources. The expenses for the three departments are as follows for the year ended December 31, 2012:
Sales administration
$120,000
Credit
84,000
Human resources
185,000
Total
$389,000
Service department expenses are allocated to divisions based on an appropriate activity base. The activity bases associated with each service department for each division during 2012 is as follows:
Service Departments
Northern Division
Southern Division
1,650
3,850
5,500 sales orders
4,900
9,100
14,000 customers
400
600
1,000 employees
Required - Prepare a report showing the service department charges allocated to each division.
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