Assume Porter's Consulting Uses the Number of Purchase Orders as the Cost

question 22

Multiple Choice

Assume Porter's Consulting uses the number of purchase orders as the cost driver for allocating purchasing costs of $285,000.If Porter issues 1,000 purchase orders, including 300 used by line activity one, 400 used by line activity two, 50 for supplies used by purchasing itself, and 250 used by administration, how much of the cost will be allocated to line activity two using the direct method of allocation?

• A)$199,500
• B)$114,000
• C)$162,857
• D)$195,000
• E)None of the above.

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Definitions:

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