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Joe's Tire Company has two support departments, Personnel and Maintenance
Joe's Tire Company has two support departments, Personnel and Maintenance. The Maintenance Department costs of $60,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $20,000 are allocated based on the number of employees. Costs of Departments A and B are $40,000 and $60,000, respectively.
Data on standard service hours and number of employees are as follows:
Maintenance Dept. ersonnel ei: Production Dept. A Production Dept. B Standard service hours used 200 00 240 160 Number of employees 10 0 40 120
How much of the Personnel Department is allocated to Department B using the direct method?
0 $5.000 0 $60.000 0 $8,000 0 $15,000 0 $12.632
Expert Solution
Computation of Cost of the Personnel Department allocated to Department B using the Direct Method:
Given,
Cost of the Personnel Department = $20,000
Total Number of Employees = 40 + 120 = 160
Department B's Number of Employees = 120
Cost of the Personnel Department allocated to Department B = $20,000 * 120 / 160 = $15,000
So, the correct option is 4th "$15,000".
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