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Q2. Z&C has two support departments, A1 and A2, and two operating departments, B1 and B2. Z&C has decided to use the direct method and

Q2. Z&C has two support departments, A1 and A2, and two operating departments, B1 and B2. Z&C has decided to use the direct method and allocate variable A1 dept. costs based on the number of transactions and fixed A1 dept. costs based on the number of employees. A2 dept. variable costs will be allocated based on the number of service requests and fixed costs will be allocated based on the number of computers. The following information is provided: (CH 8, 2.5 Marks)

Support Departments

Operating Departments

A1

A2

B1

B2

Total Department variable costs

5,000

6,000

38,000

21,000

Total department fixed costs

5,800

11,000

42,000

18,000

Number of transactions

15

18

80

45

Number of employees

5

7

15

12

Number of service requests

12

7

15

10

Number of computers

6

8

10

12

Allocate variable and fixed costs.

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