The direct method is used by Colquitt Publishing,Inc. ,to allocate service department costs to operating departments.The company has two service departments,Information Technology and Personnel,and two operating departments,Prepress and Printing. 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 Prepress Department cost after service department allocations is closest to:
A)$516,249
B)$522,964
C)$520,389
D)$510,887

Question

The direct method is used by Colquitt Publishing,Inc. ,to allocate service department costs to operating departments.The company has two service departments,Information Technology and Personnel,and two operating departments,Prepress and Printing.  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 Prepress Department cost after service department allocations is closest to:
A)$516,249 
B)$522,964 
C)$520,389 
D)$510,887

Quizplus · Accepted Answer

Allocation base for Information Technology costs = 59 + 38 = 97
Allocation base for Facilities costs = 106 + 33 = 139
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The Direct Method Is Used by Colquitt Publishing,Inc