Problem 6-6 x Your answer is incorrect. Try again. H55 Airlines has three servic

Question

Problem 6-6 x Your answer is incorrect. Try again. H55 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. H55 does not differentiate between fixed and variable costs in making allocations. The following data relate to the allocations: Budgeted Data . sts Air Miles Ticketing Baggage handling Engine maintenance Domestic flights International flights $4,000,000 $1,600,000 $8,680,000 7,127,500 21,382,500 Allocate the service department costs to the revenue-producing departments using air miles as the allocation base. Allocated to Domestic International Ticketing 300000 Baggage handling Maintenance Total

Explanation / Answer

Allocation of Expenses:

Air Miles Domestic   International Allocation Ratio 7127500 21382500 1 3

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