A company has two service departments, Human Resources (HR) and Information Technology
(IT). The HR department costs of $150,000 are allocated on the basis of the number of
employees. The IT department costs of $200,000 are allocated based on the IT service hours.
The costs of operating department X and Y are $250,000 and $180,000, respectively. Data on
budgeted number of employees and IT service hours are shown below.
Answer given is a) 85,714 Calculation done using direct method gives $ 80,000
(200,000/750*300). can someone clarify how 85,714 is given as the right answer or is there error in the given answer.
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Bindu Kaadankuzhiyil
Dubai
United Arab Emirates
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Original Message:
Sent: 06-19-2020 01:35 PM
From: Brandy Kirkland
Subject: Exam 1 Additional Practice Question
Hi Carla. We can't see the "data on budgeted number of employees. . . ." Is there a table missing or something?
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Brandy Kirkland
Accountant
Darby PA
United States
Original Message:
Sent: 06-19-2020 10:58 AM
From: Carla Loera
Subject: Exam 1 Additional Practice Question
Hi, I am currently studying to hopefully take Part 1 in September and need a bit of help with the following question, the answer is A but there is no explanation.
A company has two service departments, Human Resources (HR) and Information Technology
(IT). The HR department costs of $150,000 are allocated on the basis of the number of
employees. The IT department costs of $200,000 are allocated based on the IT service hours.
The costs of operating department X and Y are $250,000 and $180,000, respectively. Data on
budgeted number of employees and IT service hours are shown below.
Service Department Operating Department
Under the direct method, what amount of IT department costs will be allocated to Department
Y?
a. $85,714.
b. $83,721.
c. $80,000.
d. $52,174.
TIA
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Carla Loera
Student
Laredo TX
United States
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