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The Kelsey Manufacturing Company Ltd has two production departments (Assembly and Finishing) and two support departments (Janitorial and Personnel)
The Kelsey Manufacturing Company Ltd has two production departments (Assembly and Finishing) and two support departments (Janitorial and Personnel). The usage of the two support departments in 2020 is as follows:
User of Support Personnel JanitorialPersonnel — 5% Janitorial 10% — Assembly 60% 40% Finishing 30% 55%
The budgeted costs in the support departments of 2020 were as follows:
Personnel $
90 000 Janitorial $
50 000
Using the direct method, what is the Janitorial Department cost allocated to the Assembly Department?
A.
$28 948
B.
$21 053
C.
$34 158
D.
$25 000
Expert Solution
Computation of Janitorial Department cost allocated to the Assembly Department using Direct Method:
Janitorial Department Consumption by Production Department = 40%+55% = 95%
Assembly = 40% / 95% = 0.4210526
Finishing = 55% / 95% = 0.5789474
Janitorial Department Cost allocated to Assembly Department = $50,000 * 0.4210526 = $21,052.63 or $21,053
So, the correct option is B "$21,053".
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