A. Departments X and Y use a common facility whose fixed costs of operation are $90,000. The service provided by the facility to X can be purchased externally for $60,000. Similarly, Department Y can buy the facility’s services externally for $90,000. Under the Stand-Alone Cost Allocation Method, how much in common costs would be allocated to Department X?

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  1. Departments X and Y use a common facility whose fixed costs of operation are $90,000. The service provided by the facility to X can be purchased externally for $60,000.  Similarly, Department Y can buy the facility’s services externally for $90,000.  Under the Stand-Alone Cost Allocation Method, how much in common costs would be allocated to Department X?
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= $90,000 x [$60,000/($60,000+$90,000)]

= $36,000

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