Question
Orpheus Ltd has a Human Resource Department, an Administration Department and three Sales Departments. The Human Resource Department cost is allocated based on the number
Orpheus Ltd has a Human Resource Department, an Administration Department and three Sales Departments. The Human Resource Department cost is allocated based on the number of employees and the Administration Department cost is allocated based on direct labour hours. The support departments both serve each other and the three Sales Departments. The following information is available:
HR Admin Sales #1 Sales #2 Sales #3
Budgeted cost 30,000 45,000
Number of employees 10 5 15 45 30
Direct labour hours 1,000 4,000 20,000 30,000 50,000
Use the step-down method to calculate the amount of Administration Department cost allocated to Sales #1.
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