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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
Your company operates multiple departments, and you need to allocate costs appropriately. Use the following data:
| Cost Category | Department A ($) | Department B ($) | Department C ($) | Department D ($) | Department E ($) |
|---|---|---|---|---|---|
| Direct Materials | 70,000 | 75,000 | 65,000 | 80,000 | 72,000 |
| Direct Labor | 60,000 | 65,000 | 55,000 | 70,000 | 62,000 |
| Indirect Costs | 50,000 | 55,000 | 45,000 | 60,000 | 52,000 |
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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Survey of Accounting
Authors: Thomas Edmonds, Christopher Edmonds, Philip Olds, Frances McNair, Bor Yi Tsay
5th edition
1259631125, 978-1259631122
