Support Department 1 has $200,000 in costs distributed to it. Costs from Support Department 1 will be
Question:
Support Department 1 has $200,000 in costs distributed to it. Costs from Support Department 1 will be allocated to other departments based on labor hours. Support Department 2 uses 50 labor hours from Support Department 1, Production Department 1 uses 75 labor hours from Support Department 1, and Production Department 2 uses 25 labor hours from Support Department 1.
a. Using the direct method for support department cost allocation, how much of Support Department 1’s costs will be allocated to Support Department 2?
b. Using the direct method for support department cost allocation, how much of Support Department 1’s costs will be allocated to Production Department 1?
c. Using the direct method for support department cost allocation, how much of Support Department 1’s costs will be allocated to Production Department 2?
Step by Step Answer:
Financial And Managerial Accounting
ISBN: 9781337902663
15th Edition
Authors: Carl S. Warren, Jefferson P. Jones, William B. Tayler