Abound Company Has Two Support Departments (S1 and S2) and Two

question 60

Multiple Choice

Abound Company has two support departments (S1 and S2) and two producing departments (X and Y) . Department S1 serves Departments S2, X, and Y in the following percentages, respectively: 10%, 35%, 55%. Department S2 serves Departments S1, X, and Y in the following percentages, respectively: 6%, 50%, and 44%. Direct department costs for S1, S2, X, and Y are $15,000, $8,000, $105,000, and $97,500, respectively.
What are the total costs to be allocated from Department S1?

• A)$15,573
• B)$800
• C)$9,500
• D)$15,000

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Definitions:

Income Statement Accounts

Accounts found on the income statement, which report a company’s financial performance over a specific period, including revenues, expenses, gains, and losses.

Temporary Accounts

Accounts in accounting that are used to track transactions within a financial period, which are then transferred to permanent accounts at the end of the period.

Interest Expense

The cost incurred by an entity for borrowed funds, which may include the cost of bonds, loans, convertible debt, and lines of credit.

Interest Payable

The amount of interest expense that has been incurred during a period but not yet paid to creditors.