Homework Answers
| (a) | Cost allocated based on number of purchase orders | ||
| Total cost of Purchasing Department = 6.5 million | |||
| Particulars | No. of purchase orders | Cost Allocation | |
| Defense | 9,200 |
6.5 million * 9,200 / 46,000 = 1.3 million |
|
| Commercial | 36,800 |
6.5 million * 36,800 / 46,000 = 5.2 million |
|
| 46,000 | |||
| (b) | Cost allocated based on amount of purchases | ||
| Total cost of Purchasing Department = 6.5 million | |||
| Particulars | Amount of purchases | Cost Allocation | |
| Defense | 144,000,000 |
6.5 million * 144,000,000/360,000,000 = 2.6 million |
|
| Commercial | 216,000,000 |
6.5 million * 216,000,000/360,000,000 = 3.9 million |
|
| 360,000,000 | |||
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Thompson Aeronautics repairs aircraft engines. The company's Purchasing Department supports its two departments, Defense and Commercial....
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