Question no 2

A housekeeping support department budgets its costs at SR 40,000 per month plus SR 12 / hour. For January the following were the estimated and actual hours provided by the housekeeping support department to 3 operating department.

	Estimated hours spent cleaning	Actual hours spent cleaning
Department A	1600	1500
Department B	1400	1600
Department C	2000	1800
Total	5000	4900

Required:

A- What is the support department's allocation rate if estimated activity is the allocation base?

B What is the support department's allocation rate if actual activity is the allocation base?

C List one advantages and one disadvantage for each types of allocation rate. (3 points)