Exercise 11-35 (Algo) Cost Allocation: Direct Method (LO 11-2)Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The following usage data for each of the service departments for the previous period follow. RepairsHRITM1M2Repairs — 0% 0% 40% 60%HR 10% — 20% 35% 35%IT 0% 10% — 20% 70% The direct costs of the service departments in the previous period were $84,000 for Repairs, $103,600 for HR, and $189,000 for IT. Required:Use the direct method to allocate the service department costs to the production departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.

Direct Allocation Method Direct allocation method is define as the method of charging the cost of…

Answered: Exercise 11-35 (Algo) Cost Allocation:…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 4CE: Refer to Cornerstone Exercise 7.3. Now assume that Valron Company uses the sequential method to...

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Exercise 11-35 (Algo) Cost Allocation: Direct Method (LO 11-2)

Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The following usage data for each of the service departments for the previous period follow.

	Repairs	HR	IT	M1	M2
Repairs		—			0	%	0	%	40	%	60	%
HR		10	%		—		20	%	35	%	35	%
IT		0	%		10	%	—		20	%	70	%

The direct costs of the service departments in the previous period were $84,000 for Repairs, $103,600 for HR, and $189,000 for IT.

Required:

Use the direct method to allocate the service department costs to the production departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.

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