Answered: Using the direct method, the amount of…

Business

Accounting

Using the direct method, the amount of Janitorial Department cost allocated to Sales Department no. 2 is:

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter27: Lean Manufacturing And Activity Analysis

Section: Chapter Questions

Problem 16E: Cost of quality report A. Using the information in Exercise 15, identify the cost of quality...

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

The Helium Store has a Human Resources Department and a Janitorial Department that provide service to three sales departments. The Human Resources Department cost is allocated on the basis of employees, and the Janitorial Department cost is allocated on the basis of space. The following information is available:

Options:

a. P8,571

b. P15,000

c. P9,000.

d. P10,350

e. none of the above

Human Resources Janitorial Sales #1 Sales #2 Sales #3
Budgeted cost
P45,000
P30,000
Space in square feet
4,000
1,000
50,000
20,000 30,000
45
Number of employees 5
10
15
30
Using the direct method, the amount of Janitorial Department cost allocated to Sales Department no. 2
is:

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