Question - Using the direct method of allocation, assume an overhead department has $100,000 in expenses, there are two revenue producing departments, Dept A and Dept B, and costs are allocated based on number of patient visits. Dept A has 4,000 visits and Dept B has 6,000 visits. How much of the overhead department expense is allocated to Dept A?
1. $20,000
2. $40,000
3. $60,000
4. None of the above