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A company has two service departments (S1 and S2) and two user departments (U1 and U2). The following information is available:   Service Department   Cost Cost Allocation Base Amount of service used by S1 S2 User Department, U1 User Department, U2 S1 $160,000 Number of Service Calls (SC) – 25 SC 60 SC 15 SC S2 $200,000 Computer hours (CH) 2,000 CH – 3,000 CH 5,000 CH   Based on the direct method, how much of the service department costs will be allocated to U1?   A. $156,000   B. $203,000   C. $186,000   D. $171,000

A company has two service departments (S1 and S2) and two user departments (U1 and U2). The following information is available:   Service Department   Cost Cost Allocation Base Amount of service used by S1 S2 User Department, U1 User Department, U2 S1 $160,000 Number of Service Calls (SC) – 25 SC 60 SC 15 SC S2 $200,000 Computer hours (CH) 2,000 CH – 3,000 CH 5,000 CH   Based on the direct method, how much of the service department costs will be allocated to U1?   A. $156,000   B. $203,000   C. $186,000   D. $171,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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QUESTION 29

  1. A company has two service departments (S1 and S2) and two user departments (U1 and U2). The following information is available:

     

    Service

    Department

     

    Cost

    Cost Allocation

    Base

    Amount of service used by

    S1

    S2

    User Department, U1

    User Department, U2

    S1

    $160,000

    Number of Service Calls (SC)

    –

    25 SC

    60 SC

    15 SC

    S2

    $200,000

    Computer hours (CH)

    2,000 CH

    –

    3,000 CH

    5,000 CH

     

    Based on the direct method, how much of the service department costs will be allocated to U1?

      A.

    $156,000
      B.

    $203,000
      C.

    $186,000
      D.

    $171,000
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