(Appendix 11A)Boa Corp.uses the direct method to allocate service department overhead costs to operating departments.Information for the month of June follows:
What would be the amount of maintenance department costs allocated to Operating Department A for June?
A) $8,000.
B) $8,800.
C) $10,000.
D) $20,000.

Question

(Appendix 11A)Boa Corp.uses the direct method to allocate service department overhead costs to operating departments.Information for the month of June follows: 
What would be the amount of maintenance department costs allocated to Operating Department A for June?
A) $8,000. 
B) $8,800. 
C) $10,000. 
D) $20,000.

Quizplus · Accepted Answer

The maintenance department costs allocated to Operating Department A would be $10,000. This is calculated by multiplying the maintenance department cost of $40,000 by the allocation rate for Operating Department A of 0.25, which results in an allocation of $10,000.