Catoire Consultancy Uses the Direct Method to Allocate Its Service

question 18

Essay

Catoire Consultancy uses the direct method to allocate its service department costs to its operating departments. The company has two service departments, Information Technology and Administration, and two operating departments, Corporate Practice and Government Practice. Data concerning those departments follow:
Information Technology Department costs are allocated on the basis of computers and Administration Department costs are allocated on the basis of employees. Required: Allocate the service department costs to the operating departments using the direct method.

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Definitions:

Job Stress

The physical and emotional strain a person experiences as a result of job demands or pressures.

Technology

Refers to the application of scientific knowledge for practical purposes, especially in industry and in our daily lives through tools, machines, systems, and devices.

Job Ladder

A hierarchy within a company or industry that illustrates the progression of roles from entry-level positions to higher levels of responsibility and authority.