Question: SPRINT , Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes….

Question: SPRINT , Inc., manufactures athletic
footwear and athletic garments for every newbie {{and professional}}
athletes. The company has two product traces (garments and footwear),
which might be produced in separate manufacturing facilities; nonetheless,
every manufacturing facilities share the similar help corporations for
information know-how and human property. The following reveals
entire costs for each manufacturing facility and for each help

Full Costs by Division (in 1000’s)

Data know-how (IT) $ 2,000

Human property (HR) 1,000

Garments $10,000

Footwear $8,000

Full costs $24,000

All the costs of the help departments (IT and HR) are
allotted to the manufacturing departments (garments and footwear) based totally
on the subsequent Info and bases, as beneath:

Data know-how: Number of IT labor hours labored by

Human property: Number of employees supported by division

Division IT Hours Used Number of Staff

Garments 5,000 120

Footwear 3,000 40

Data know-how – 40

Human property 2,000 –


1. Allocate the value of the help division (of data
know-how and human property) to the working division
(garments and footwear using (a) the direct method, (b) the step-down
method (allocate information know-how first), (c) the reciprocal

2. Assume that every one the work of the IT division might presumably be
outsourced to an neutral agency for $97.50 per hour. If Spirit
Teaching no longer operated its private IT division, 30% of the costs
of the IT division might presumably be eradicated. Should Spirit outsource
its IT corporations?

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