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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 HR service department to Commercial production department.       $50,000     $49,500     $55,000     $44,000

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 HR service department to Commercial production department.       $50,000     $49,500     $55,000     $44,000

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 21

  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 HR service department to Commercial production department.

     

       

    $50,000
       

    $49,500
       

    $55,000
       

    $44,000

     

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