AJ Accounting performs two types of services, Audit and Tax. AJ's overhead costs consist of computer support, $200,000; and legal support, $100,000. Information on the two services is: Audit Tax Direct labor cost $50,000 $100,000 CPU minutes 40,000 10,000 Legal hours used 200 800 Overhead applied to audit services using traditional costing is A) $100,000. B) $120,000. C) $180,000. D) $200,000.

AJ Accounting performs two types of services, Audit and Tax. AJ's overhead costs consist of computer support, $200,000; and legal support, $100,000. Information on the two services is: Audit Tax Direct labor cost $50,000 $100,000 CPU minutes 40,000 10,000 Legal hours used 200 800 Overhead applied to audit services using traditional costing is A) $100,000. B) $120,000. C) $180,000. D) $200,000.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950
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