Q3. ADLG Company has two support departments, SS1 and SS2, and two operating departments, OD1 and OD2. The company has decided to use the direct method and allocate variable SS1 dept. costs based on the number of transactions and fixed SS1 dept. costs based on the number of employees. SS2 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 values have been extracted for the allocation: (4 Marks) Support Departments Operating Departments SS1 SS2 OD1 OD2 Total Department variable costs 16,000 19,000 105,000 68,000 Total department fixed costs 19,500 34,000 120,000 55,000 Number of transactions 50 55 250 140 Number of employees 18 24 47 38 Number of service requests 37 22 26 32 Number of computers 20 25 31 37

You are required to allocate variable and fixed costs. (Chapter 8) Answer: