ABC Company has two support departments, HR and IS, and two operating departments, Production and Sales. HR department costs are allocated using number of employees, and IS department costs are allocated using Labor hours. For July 2019, the following information is given: Cost Before Allocation Number of Employees Labor Hours HR IS $90,000 $60,000 2,000 Answer: 6,000 Production $360,000 3,000 15,000 Sales $520,000 5,000 9,000 Total $1,030,000 10,000 30,000 Using the Direct method, What IS department cost will be allocated to the Sales departments?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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ABC Company has two support departments, HR and IS, and two operating departments, Production and Sales. HR department costs
are allocated using number of employees, and IS department costs are allocated using Labor hours. For July 2019, the following
information is given:
Cost Before Allocation
Number of Employees
Labor Hours
HR
IS
$90,000 $60,000
2,000
Answer:
6,000
Production
$360,000
3,000
15,000
Sales
$520,000
5,000
9,000
Total
$1,030,000
10,000
30,000
Using the Direct method, What IS department cost will be allocated to the Sales departments?
Transcribed Image Text:ABC Company has two support departments, HR and IS, and two operating departments, Production and Sales. HR department costs are allocated using number of employees, and IS department costs are allocated using Labor hours. For July 2019, the following information is given: Cost Before Allocation Number of Employees Labor Hours HR IS $90,000 $60,000 2,000 Answer: 6,000 Production $360,000 3,000 15,000 Sales $520,000 5,000 9,000 Total $1,030,000 10,000 30,000 Using the Direct method, What IS department cost will be allocated to the Sales departments?
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