Activity Based Costing

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Exercise $9-29($Static$)$ Plantwide versus Department Allocation $($LO $9-2,3)$

West State Furniture $($WSF$)$ manufactures desks and desk chairs using two departments within a single facility. The West Department produces the desks, and the State Department produces the chairs. WSF uses plantwide allocation to allocate its overhead to all products. Direct materials cost is the allocation base. The rate used is $60$ percent of direct materials cost. Last year, revenue, direct materials, and direct labor were as follows.

$\backslash$table$[[,$Desks,Chairs$],[$Sales revenue,$$945,000,$$$810,000$