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Your company operates multiple departments, and you need to allocate costs appropriately. Use the following data: Cost Category Department A ($) Department B ($) Department

  1. Your company operates multiple departments, and you need to allocate costs appropriately. Use the following data:

Cost CategoryDepartment A ($)Department B ($)Department C ($)Department D ($)Department E ($)
Direct Materials55,00060,00050,00065,00058,000
Direct Labor45,00050,00040,00055,00048,000
Indirect Costs35,00040,00030,00045,00038,000

Requirements:

  • Allocate indirect costs based on a predetermined allocation base.
  • Calculate the total cost for each department.
  • Determine the direct cost percentage of the total cost for each department.
  • Present the allocated costs in a separate table.
  • Explain the chosen allocation base.
  • Provide the formula used for cost allocation.

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