Dickson Company has two production departments and two support departments. Each department occupies the following square footage: Housekeeping department costs are allocated on the basis of the square footage of space. If the budget for housekeeping costs is $45,000, what amount would be allocated to the accounting department using the direct method?
A)$0.
B)$16,071.
C)$22,500.
D)$45,000.

Question

Dickson Company has two production departments and two support departments. Each department occupies the following square footage:  Housekeeping department costs are allocated on the basis of the square footage of space. If the budget for housekeeping costs is $45,000, what amount would be allocated to the accounting department using the direct method?
A)$0. 
B)$16,071. 
C)$22,500. 
D)$45,000.

Quizplus · Accepted Answer

5,000 + 5,000 = 10,000 
5,000 ÷ 10,000 = 50% x $45,000 = $22,500 
Acct sq ft + tax sq ft = total prod sq ft 
Acct Sq ft ÷ total prod sq ft = percent alloc x housek costs = alloc housek costs

Dickson Company Has Two Production Departments and Two Support Departments