Data Master Is a Computer Software Consulting Company

question 101

Essay

Data Master is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Moore is considering three different methods of allocating overhead costs-the direct method, the step method, and the reciprocal method. Moore assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department.
Information systems are allocated on the basis of hours of computer usage; facilities are allocated on the basis of floor space.
Required:
Allocate the service department costs to the user departments using the step method. Allocate Information Systems first and round to the nearest whole dollar. Provide total user department costs.

Gain skills in interpreting financial accounting data to make business decisions.

Understand the differences in accounting for dividends received under different investment models.

Comprehend how the degree of influence affects the classification of investments.

Grasp the impact of fair value through other comprehensive income model on management evaluation.

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Definitions:

Ledger Accounts

Records that summarize transactions related to a specific asset, liability, equity, revenue, or expense, forming the backbone of the double-entry bookkeeping system.

Journal Entries

Records of the financial transactions of a business that are entered into its accounting system.

Posting

The process of recording financial transactions in the ledger of a business.

Chart of Accounts

A structured list of all the financial accounts in the general ledger of a company, used for organizing transactions and reporting financial data.