88 ABC Corporation has three service departments with the following costs and ac

Question

88

ABC Corporation has three service departments with the following costs and activity base:

ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:

What is the service department charge rate for the Personnel Department?

a.$3,077

b.$2,758

c.$3,200

d.$1,000

Service Department Cost Activity Base for Allocation Graphics Production $200,000     number of copies Accounting 500,000     number of invoices processed Personnel Department 400,000     number of employees

Explanation / Answer

Calculate service department charge rate for the Personnel Department

Personnel department cost = $400000

Total no of employees = (130+145+125) = 400

service department charge rate for the Personnel Department = 400000/400 = $1000

so answer is d) $1000

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