(Appendix 4B) Ockey Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Information Technology and Personnel, and two operating departments, Fabrication and Customization.
Information Technology Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees.
-The total Fabrication Department cost after service department allocations is closest to:
A) $270,110
B) $277,969
C) $280,623
D) $274,308

Question

(Appendix 4B) Ockey Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Information Technology and Personnel, and two operating departments, Fabrication and Customization.
  Information Technology Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees.
-The total Fabrication Department cost after service department allocations is closest to:
A) $270,110 
B) $277,969 
C) $280,623 
D) $274,308

Quizplus · Accepted Answer

Allocation base for Information Technology costs = 43 + 37 = 80
Allocation base for Support costs = 73 + 32 = 105
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(Appendix 4B) Ockey Corporation Uses the Direct Method to Allocate