Following is the departmental data of Alpha Company.If calculated through the direct method, the support department costs assigned to the grinding department are _____.

A) $100,000
B) $350,000
C) $200,000
D) $150,000
E) $240,000

Question

Following is the departmental data of Alpha Company.If calculated through the direct method, the support department costs assigned to the grinding department are _____.

A) $100,000 
B) $350,000 
C) $200,000 
D) $150,000 
E) $240,000

Quizplus · Accepted Answer

Usage or allocation ratio for the Grinding department = 400,000 / (400,000 + 100,000) = 80%
Cost of support department allocated to the Grinding department = 80% × $300,000 = $240,000

Following Is the Departmental Data of Alpha Company