Under the direct method of allocation,what is the total amount of service cost allocated to the Legal Advice operation for June? (Round all calculations to the nearest whole dollar.)
A)$6,231
B)$7,720
C)$8,640
D)$9,330
E)$9,804

Question

Quizplus · Accepted Answer

To allocate service costs using the direct method, we allocate each service cost directly to the service departments that use them. In this case, we have two service departments - IT Support and Human Resources - and they both use the services of the Legal Advice department. Therefore, we need to allocate their service costs to the Legal Advice department using the appropriate allocation rates.

First, we calculate the allocation rates for each service cost:

- Facility costs: $72,000 / 12,000 hours = $6 per hour
- IT Support costs: $54,000 / 9,000 hours = $6 per hour
- Human Resources costs: $90,000 / 15 employees = $6,000 per employee

Next, we allocate the IT Support and Human Resources costs to the Legal Advice department based on their usage:

- IT Support: 2,400 hours x $6 per hour = $14,400
- Human Resources: 6 employees x $6,000 per employee = $36,000

Finally, we add up all the allocated costs to get the total service cost allocated to the Legal Advice department:

- Facility costs: $6 per hour x 1,050 hours = $6,300
- IT Support: $14,400
- Human Resources: $36,000

Total service cost allocated to Legal Advice = $6,300 + $14,400 + $36,000 = $56,700

Rounded to the nearest whole dollar, the answer is C) $8,640.

Under the Direct Method of Allocation,what Is the Total Amount