Catoire Consultancy Uses the Direct Method to Allocate Its Service

question 58

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:

Mode

The most frequent score.

Median

The median is a measure of central tendency that divides a data set into two equal halves, representing the middle value when the data set is ordered.

Normal Distribution

A distribution of scores in which most people score in the middle and fewer score at the extremes; also known as a “bell curve.”

Bell Curve

A graphical representation of a normal distribution of data, characterized by a symmetric, bell-shaped curve.