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Cost Allocation: Direct Method

LO 11-2. Cost Allocation: Direct Method. LO 11-2 Allocate service department costs using the direct method. Direct method: Charges costs of service departments to user departments without making allocations among service departments. LO 11-2. Cost Allocation: Direct Method.

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Cost Allocation: Direct Method

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  1. LO 11-2 Cost Allocation: Direct Method LO 11-2 Allocate service department costs using the direct method. • Direct method: • Charges costs of service departments to user departments • without making allocations among service departments.

  2. LO 11-2 Cost Allocation: Direct Method Pacific Mine (P2) Pacific Mine (P2) a 20.0% = 20,000 hours ÷ (20,000 hours + 80,000 hours) b 62.5% = 5,000 employees ÷ (5,000 employees + 3,000 employees) c $160,000 = 20% × $800,000 d $3,125,000 = 62.5% × $5,000,000

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