Question

Depreciation Expense on the Heating and Air Conditioning Equipment for the factory of $50,000 is allocated to five departments. The cost-allocation base for this expense is the number of cubic feet, which equals 100,000 cubic feet. Information for five departments is below: Department Square Feet Cubic Feet Department A 15,000 15,000 Department B 5,000 5,000 Department C 30,000 20,000 Department D 20,000 35,000 Department E 10,000 25,000 How much Depreciation Expense is allocated to Department A

Answer 1

Answer: $7,500

Explanation:

Cost allocation base is Cubic feet which is 100,000 ft³.

Department A has 15,000 ft³ of the 100,000 ft³.

Depreciation is $50,000

Depreciation for Department A is therefore;

= (15,000/100,000) * 50,000

= $7,500