The purchasing department of Lorenzo Corporation operates as a service department. The number of purchase orders processed during the most recent month are as follows:Eastern Division83 purchase ordersCentral Division48 purchase ordersWestern Division29 purchase ordersThe monthly cost of operating the purchasing department, including personnel, amounted to $50,000. Allocate the cost of the purchasing department using the number of purchase orders as an allocation base.

The allocation of the cost of the purchasing department is represented as below: Hence, the…

Answered: The purchasing department of Lorenzo…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 2CE: Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each...

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The purchasing department of Lorenzo Corporation operates as a service department. The number of purchase orders processed during the most recent month are as follows:

Eastern Division	83 purchase orders
Central Division	48 purchase orders
Western Division	29 purchase orders

The monthly cost of operating the purchasing department, including personnel, amounted to $50,000.

Allocate the cost of the purchasing department using the number of purchase orders as an allocation base.

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