Arcana Ltd has two support departments (information technology and engineering) and two production departments (assembly and finishing). The budgeted costs of the information technology and engineering departments are $90,000 and $50,000, respectively. The usage of the two support departments is as follows: User of services Information technology Engineering Information technology 5% Engineering 10% Assembly 60% 40% Finishing 30% 55% Using the direct method, what is the information technology department cost allocated to the assembly department?
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Arcana Ltd has two support departments (information technology and engineering) and two production departments (assembly and finishing). The budgeted costs of the information technology and engineering departments are $90,000 and $50,000, respectively. The usage of the two support departments is as follows:
| User of services | Information technology | Engineering |
| Information technology | 5% | |
| Engineering | 10% | |
| Assembly | 60% | 40% |
| Finishing | 30% | 55% |
Using the direct method, what is the information technology department cost allocated to the assembly department?
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