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Direct method of cost allocation

Auro national bank has two service department, the Human Resources Department and the Computing Department. The bank has two other department that directly service customers, the Deposit Department and the Loan Department. The usage of the two service departments output for the year is as follows:

User of service Human Resources Computing
Human Resources...................................................... - 15%
Computing.................................................................. 10% -
Deposit....................................................................... 60% 50%
Loan............................................................................. 30% 35%
The budgeted costs in the two service department for the year are as follows:
Human Resources....................................................................................... $459,000
Computing................................................................................................... $688,500
REQUIRED
1. Use the direct method to allocate the budgeted costs of the Human Resources and Computing department to the Direct and Loan departments.

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Department. The bank has two other department that directly service customers, the Deposit Department and the Loan Depatement. The usage of the two service departments output for the year is as follows:

User of service Human Resources Computing
Human Resources...................................................... - 15%
Computing.................................................................. 10% ...

Solution Summary

Response provides the steps for direct method of cost allocation

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