Answer:
Administration Cost Allocated To Domestic is $197,183.
Administration Cost Allocated To International is $152,817.
Accounting Cost Allocated To Domestic is $29,400.
Accounting Cost Allocated To International is $117,600.
Explanation:
The Direct Method used for allocating Services Departments Cost to Operating Departments ignores the services used by service departments and allocate costs just to operating departments based on each department's consumption of allocation base. So, the costs of Administration and Accounting departments will be allocated to Domestic and International Departments.
Allocation of Administration Department Cost:
<u>Domestic</u>
Direct Cost of Administration * (No. of Employees in Domestic / Total No. of Employee in Operating Departments)
⇒ 350,000 * (40 / 71) = $197,183.
<u>International</u>
Administration Cost Allocated = 350,000 * (31 / 71) = $152,817.
Allocation of Accounting Department Cost:
<u>Domestic</u>
Direct Cost of Accounting * (No. of Transactions in Domestic / Total No. of Transactions in Operating Departments)
⇒ 147,000 * (19,000 / 95,000) = $29,400.
<u>International</u>
Accounting Cost Allocated = 147,000 * (76,000 / 95,000) = $117,600.
