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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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QUESTION 24
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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.$150,000
$169,125
$131,000
$143,192.50
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