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ABCO Mortgage Company has the following two service and production departments related to its lending and servicing business:    Service Departments Production Lending Departments   HR Accounting Commercial Consumer Department cost $110,000 $225,500 $2,800,000 $1,600,000 Number of employees 2 3 9 11 Number of transactions 750 2,250 3,650 6,350 HR costs are allocated on the basis of number of employees.  Accounting cost are allocated based on the number of transactions.    Required:  Using the Direct Method, allocate the amounts of overhead from the Accounting service department to Consumer production department.

ABCO Mortgage Company has the following two service and production departments related to its lending and servicing business:    Service Departments Production Lending Departments   HR Accounting Commercial Consumer Department cost $110,000 $225,500 $2,800,000 $1,600,000 Number of employees 2 3 9 11 Number of transactions 750 2,250 3,650 6,350 HR costs are allocated on the basis of number of employees.  Accounting cost are allocated based on the number of transactions.    Required:  Using the Direct Method, allocate the amounts of overhead from the Accounting service department to Consumer production department.

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 24

  1.  

    ABCO Mortgage Company has the following two service and production departments related to its lending and servicing business: 

     

    Service Departments

    Production Lending Departments

     

    HR

    Accounting

    Commercial

    Consumer

    Department cost

    $110,000

    $225,500

    $2,800,000

    $1,600,000

    Number of employees

    2

    3

    9

    11

    Number of transactions

    750

    2,250

    3,650

    6,350

    HR costs are allocated on the basis of number of employees.  Accounting cost are allocated based on the number of transactions.

     

     Required:  Using the Direct Method, allocate the amounts of overhead from the Accounting service department to Consumer production department.

     

       

    $150,000
       

     

     

     

    $169,125

     
       

    $131,000
       

     

    $143,192.50

     

     

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