Chapter 19, Problem 1CMA

Logo Inc. has two data services departments (Systems and Facilities) that provide support to the company’s three production departments (Machining, Assembly, and Finishing). The overhead costs of the Systems Department are allocated to other departments on the basis of computer usage hours. The overhead costs of the Facilities Department are allocated based on square feet occupied (in thousands). Other information pertaining to Logo is as follows.

If Logo employs the direct method of allocating service department costs, the overhead of the Systems Department would be allocated by dividing the overhead amount by:

1. a. 1,200 hours.
2. b. 8,100 hours.
3. c. 9,000 hours.
4. d. 9,300 hours.