Essex Consultancy Uses the Direct Method to Allocate Its Service

question 11

Essay

Essex 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:

Organic Compound

A compound consisting of a backbone made up of carbon atoms.

Inorganic Compound

A simple substance that does not contain a carbon backbone.

Carbon

Carbon is a chemical element with symbol C and atomic number 6, essential to life on Earth, forming a vast number of compounds including fossil fuels and DNA.

Valence Electrons

The electrons in the outer electron shell, known as the valence shell, of an atom; in the formation of a chemical bond, an atom can accept electrons into its valence shell or donate or share valence electrons.