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Jorgenson, Inc. has 2 departments-sorting and molding. The payroll and IT departments provide services for the production departments and all other service departments. Payroll is
Jorgenson, Inc. has 2 departments-sorting and molding. The payroll and IT departments provide services for the production departments and all other service departments. Payroll is allocated based on number of employees and IT is allocated based on number of computer stations. Jorgenson provided the following information concerning its departments for January: Cost Number of Square Computer Number of Department Incurred Employees Feet Stations Labor Hours Sorting $58,000 40 3,000 8 20,000 Molding $84,000 20 4,500 2 10,000 IT $50,000 15 1,000 12 3,000 Payroll $36,000 25 1,500 8 7,000 How much service cost will be allocated to the sorting department using the direct method? $64,000 $40,000 $24,000 $68,800
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