Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $100,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $112,500 and $135,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
Production
Support DepartmentsDepartments

Using the direct method, what amount of Warehouse Department costs will be allocated to Department Books? (Do not round any intermediary calculations.)
A) $143,657
B) $206,343
C) $135,000
D) $170,679

Question

Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $100,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $112,500 and $135,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
Production
Support DepartmentsDepartments

Using the direct method, what amount of Warehouse Department costs will be allocated to Department Books? (Do not round any intermediary calculations.)
A) $143,657 
B) $206,343 
C) $135,000 
D) $170,679

Quizplus · Accepted Answer

Warehouse Department costs allocated to Department Books = 1580 / (1100 + 1580) × $350,000 = $206,343

Goldfarb's Book and Music Store Has Two Service Departments, Warehouse