With Department A sales of $200,000, Department B sales of $600,000, and overhead expense to be allocated of $25,000, the distribution of overhead to Department A based on sales is:
A)$18,750
B)$25,000
C)$2,600
D)$6,250
E)None of these

Question

Quizplus · Accepted Answer

The overhead is allocated based on the proportion of sales. Department A's sales are 1/4 of the total sales ($200,000 out of $800,000), so 1/4 of the $25,000 overhead is $6,250.

With Department a Sales of $200,000, Department B Sales of $600,000