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natka813 [3]
3 years ago
13

Perez Corporation’s computer services department assists two operating departments in using the company’s information system eff

ectively. The annual cost of computer services is $583,000. The production department employs 40 employees, and the sales department employs 13 employees. Perez uses the number of employees as the cost driver for allocating the cost of computer services to operating departments. Required Allocate the cost of computer services to operating departments.
Business
1 answer:
ollegr [7]3 years ago
3 0

Answer:

Production department $440,000

Sales department $143,000

Explanation:

The allocation of the total cost to the operating departments is proportional to the number of employees. In other words, as the number of employees increases, so does the allocated cost and vice versa.

Hence,

Cost allocated to the production department

= 40/(40 + 13) × $583,000

= 40/53 × $583,000

= $440,000

Cost allocated to the sales department

= 13/(40 + 13) × $583,000

= 13/53 × $583,000

= $143,000

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Explanation:

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Direct materials, $7 per unit, Direct labor, $5 per unit, Variable overhead, $6 per unit, and Fixed overhead, $270,000. The comp
Arte-miy333 [17]

Answer:

Income reported under absorption costing =$440,000

Explanation:

<em>The income reported under absorption costing can be determined by  adjusting the income under variable costing for difference in profit.</em>

<em>The steps are outlined below:</em>

<em>Step 1</em>

<em>Calculate the Overhead absorption rate</em>

OAR = Budgeted Fixed overhead/ Budgeted number of units

=  $270,000/ 27,000 units

= $10

<em>Step 2</em>

<em>Calculate the change in inventory </em>

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<em>Step 3</em>

<em>Calculate the difference in profit </em>=

<em> Difference in profit = OAR × change in inventory</em>

=8500×$10

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<em>Step 4</em>

<em>Calculate Income under absorption costing</em>

<em> =  Income under variable costing +  Difference in profit</em>

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Income reported under absorption costing =$440,000

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3 years ago
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Answer:

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