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QUESTION 23   ABCO Mortgage Company has the following two service and production departments related to its lending and servicing business:    Service Departments Production Lending Departments   HR Accounting Commercial Consumer Department cost $110,000 $225,500 $2,800,000 $1,600,000 Number of employees 2 3 9 11 Number of transactions 750 2,250 3,650 6,350 HR costs are allocated on the basis of number of employees.  Accounting cost are allocated based on the number of transactions.    Required:  Using the Direct Method, allocate the amounts of overhead from the Accounting service department to Commercial production department.       $56,375     $82,307.50     $68,000     $75,000

QUESTION 23   ABCO Mortgage Company has the following two service and production departments related to its lending and servicing business:    Service Departments Production Lending Departments   HR Accounting Commercial Consumer Department cost $110,000 $225,500 $2,800,000 $1,600,000 Number of employees 2 3 9 11 Number of transactions 750 2,250 3,650 6,350 HR costs are allocated on the basis of number of employees.  Accounting cost are allocated based on the number of transactions.    Required:  Using the Direct Method, allocate the amounts of overhead from the Accounting service department to Commercial production department.       $56,375     $82,307.50     $68,000     $75,000

Financial & Managerial Accounting
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter23: Performance Evaluation For Decentralized Operations
Section: Chapter Questions
Problem 23.17EX
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QUESTION 23

  1.  

    ABCO Mortgage Company has the following two service and production departments related to its lending and servicing business: 

     

    Service Departments

    Production Lending Departments

     

    HR

    Accounting

    Commercial

    Consumer

    Department cost

    $110,000

    $225,500

    $2,800,000

    $1,600,000

    Number of employees

    2

    3

    9

    11

    Number of transactions

    750

    2,250

    3,650

    6,350

    HR costs are allocated on the basis of number of employees.  Accounting cost are allocated based on the number of transactions.

     

     Required:  Using the Direct Method, allocate the amounts of overhead from the Accounting service department to Commercial production department.

     

       

    $56,375
       

    $82,307.50
       

    $68,000
       

    $75,000

     

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