Koehl Corporation uses the direct method to allocate service department costs to operating departments.The company has two service departments,Administrative and Facilities,and two operating departments,Assembly and Wholesaling. Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied.The total Wholesaling Department cost after the allocations of service department costs is closest to:
A) $403,990
B) $396,430
C) $403,642
D) $402,601

Question

Koehl Corporation uses the direct method to allocate service department costs to operating departments.The company has two service departments,Administrative and Facilities,and two operating departments,Assembly and Wholesaling.  Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied.The total Wholesaling Department cost after the allocations of service department costs is closest to:
A) $403,990 
B) $396,430 
C) $403,642 
D) $402,601

Quizplus · Accepted Answer

Allocation base for Administrative costs = 22,000 + 14,000 = 36,000
Allocation base for Facilities costs = 39,000 + 2,000 = 41,000
 11ea7761_18b2_4300_81a5_73f019425b29_TB2580_00

Koehl Corporation Uses the Direct Method to Allocate Service Department