Question

Department A had sales of $100,000.00, Department B had sales of $300,000.00, and total overhead expenses were $83,000.00. The allocation of overhead to Department A should be

Answer 1

$20,750.00

Explanation:

Answer 2

Given that Department A had sales of $100,000.00 and Department B had sales of $300,000.00, the ratio of department A's sales to that of department B is 100,000 : 300,000 = 1 : 3.

Given that the total overhead expenses were $83,000.00, the allocation of overhead to department B is given by 83,000 / (3 + 1) = 83,000 / 4 = $20,750