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Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs...

Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $100,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $112,500 and $135,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:

Production

Support Departments Departments
​ Warehouse Department Data Center Department Music Books
Budgeted costs $350,000​ $100,000​ $112,500​ $135,000​
Budgeted warehouse-hours NA 560​ 1100​ 1580​
Number of computer hours 270​ NA 870​ 1070​

Using the direct method, what amount of Warehouse Department costs will be allocated to Department Books? (Do not round any intermediary calculations.)

$206,343

$143,657

$170,679

$135,000
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Answer #1

Warehouse dept costs allocated to dept books

Allocation base - budgeted warehouse hours

= 350,000 * 1580 / (1100+1580)

= 350,000 * 1580 / 2680

= 206,343

Option A

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