Modoc Bank is a small retail bank with two branches, Downtown and Mall. It has three service departments: Personnel, Finance, and Building Occupancy. The service departments provide support to both branches as well as to the other service departments. However, the branches are considered the only two profit centers, and the branch managers are evaluated on branch profits after allocation of service department costs.
During the current period, the direct costs incurred in each of the departments follow:
|
Department |
Direct Cost |
|
Personnel |
$ 202,500 |
|
Finance |
126,000 |
|
Building Occupancy |
150,000 |
|
Downtown |
950,000 |
|
Mall |
425,000 |
|
Total |
$1,853,500 |
Personnel costs are allocated on the basis of number of employees. Finance costs are allocated on the basis of billable transactions. Building Occupancy costs are allocated on the basis of the number of square feet in each user department. For the current period, the following table summarizes the usage of services by other service cost centers and other departments:
|
Service Department |
|||
|
|
|
Building Occupancy (square feet) |
|
|
|
Personnel (employees) |
Finance (transactions) |
|
|
Departments |
|||
|
Personnel |
–0– |
13,000 |
15,000 |
|
Finance |
30 |
–0– |
10,000 |
|
Building |
|
|
|
|
Occupancy |
15 |
1,000 |
–0– |
|
Downtown |
60 |
60,000 |
30,000 |
|
Mall |
30 |
24,000 |
45,000 |
|
Total |
135 |
98,000 |
100,000 |
Using the direct method for service cost allocations, what is the total cost for each branch that will be used for determining branch profits?