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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
QUESTION 29
-
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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