ABC Corporation has three service departments with the following costs and activ

Question

ABC Corporation has three service departments with the following costs and activity base:

ABC has three operating divisions, Micro, Macro and Super. Their revenue, cost and activity information are as follows:

What is the service department charge rate for Graphics Production?

a.$2.00

b.$6.66

c.$0.50

d.$10.00

Service Department Cost Activity Base for Allocation Graphics Production $200,000     number of copies Accounting 500,000     number of invoices processed Personnel Department 400,000     number of employees

Explanation / Answer

charge rate for Graphics Production is $2

so answer is

a.$2.00

charge rate for Graphics Production= graphicproduction cost / Number of copies made

charge rate for Graphics Production = 200000 / (20000+30000+50000) = 2

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