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Cost Accumulation, Tracing and Allocation XYZ Ltd has two operating departments: geophysics and sampling with two support departments- materials handling and information technology (IT). An
Cost Accumulation, Tracing and Allocation XYZ Ltd has two operating departments: geophysics and sampling with two support departments- materials handling and information technology (IT). An analysis of the work done by the support departments is provided below. Supplied By IT Geophysics Sampling 350 475 Materials Handlin Materials Handling (direct labour hours) IT (direct labour hours) 10 450 600 260 The budgeted costs of the support departments for the coming year are: Materials Handling $110,000 IT $75,000 The budgeted costs of the operating departments for the coming year are $3,250,450 for Geophysics and $1,275,000 for Sampling Required Allocate the costs of the support departments to the operating departments using: a) Direct method b) Step-down method
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