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Sasha Company allocates the estimated $199,800 of its accounting department costs to its production and sales...

Sasha Company allocates the estimated $199,800 of its accounting department costs to its production and sales departments since the accounting department supports the other two departments particularly with regard to payroll and accounts payable functions. The costs will be allocated based on the number of employees using the direct method. Information regarding costs and employees follows: Department Employees Accounting 4 Production 36 Sales 17

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Answer #1

Accounting department costs that will be allocated to the production = (Costs to be allocated / Employees in Production and Sales) × Employees in production

Accounting department costs that will be allocated to the production = [$199,800 / (36 + 17)] × 36

Accounting department costs that will be allocated to the production = $135,713.2

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