Langdon Company has two service departments (Service 1 and Service 2) and two op
ID: 2571801 • Letter: L
Question
Langdon Company has two service departments (Service 1 and Service 2) and two operating departments (Operating 1 and Operating 2). Service 1 costs of $131,250 are allocated on the basis of Service 1 Hours. Service 2 costs of $393,750 are allocated on the basis of Service 2 Hours. Langdon uses the direct method of service department allocation. Usage of Service 1 and Service 2 hours are as follows:
How much total service department cost should be allocated to Operating 1?
2)
How much total service department cost should be allocated to Operating 2?
Service 1 Hours Service 2 Hours Service 1 - 200 Service 2 250 - Operating 1 170 300 Operating 2 330 400Explanation / Answer
Direct method :-
How much total service department cost should be allocated to Operating 1?
Service 1 [ 131250 * 170 / ( 170 + 330 ) ]
+ Service 2 [ 393750 * 300 / ( 300 + 400 ) ]
44625 + 168750 = $ 213375
How much total service department cost should be allocated to Operating 2 ?
Service 1 [ 131250 * 330 / ( 170 + 330 ) ]
+ Service 2 [ 393750 * 400 / ( 300 + 400 ) ]
86625 + 225000 = $ 311625
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.