Question

Support Department Allocations The centralized computer technology department of Hardy Company has expenses of $327,000. The department has provided a total of 10,900 hours of service for the period. The Retail Division has used 1,199 hours of computer technology service during the period, and the Commercial Division has used 9,701 hours of computer technology service. How much should each division be allocated for computer technology department services? Do not round interim calculations. Retail Division $ Commercial Division $

Answer 1

Answer:

Retail division = 1199 * 30 = $35,970

Commercial division = 9701 * 30 = $291,030

Explanation:

We assume that the allocation is done by activity basis and thus computer technology department's expenses will be allocated on the total number of service hours used.

The per hour expense = 327,000 / 10,900 = $30/ hour

Costs are allocated as follows,

Retail division = 1199 * 30 = $35,970

Commercial division = 9701 * 30 = $291,030

Hope that helps.