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Answer
IT department cost is $150,000
Overhead rate allocate HR department cost is $1,000 per employee.
50 employees are working in IT department.
HR department cost allocated to IT department
= 1,000 × 50 = $50,000
Cost already incurred in IT department is $150,000 and the cost allocated from HR department to IT department is $50,000.
Total cost in IT department after allocating HR department cost to IT department
= 50,000 + 150,000 = $200,000
Total cost in IT department after allocating HR department cost is $200,000. The firm only has twoservice department and use step down method . HR department cost is allocated first . Therefore IT department cost allocated to production department is $200,000.
Option $200,000 is CORRECT.
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