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Question 8

Khaled Inc. has two support departments (utilities and information system) and two operating departments (A and B). The base of allocation of support department costs are: number of employees for Utility Department and number of computers for Information system department.

The following data are given:

Support Departments

Operating Departments

Utilities

Information system

Operating department A

Operating department B

Total

Costs

SR 55,000

SR 75,000

SR 127,000

SR 106,000

SR 363,000

Number of employees

25

35

40

100

Number of Computers

15

55

30

100

Required:

Allocate the support department costs and calculate the total costs of the operating departments unsing the direct method.