7) Using the step-down method, in the sequence Warehouse department first and Data center department next, what amount of Warehouse Department cost will be allocated to the Music Department?

A) $200,000

B) $100,000

C) $140,000

D) $125,000

8) Using the step-down method, in the sequence Warehouse department first and Data center department next, what will be the total amount of cost in the Data center department cost pool before allocation to the Music and Book Departments?

A) $187,500

B) $150,000

C) $275,000

D) $125,000

9) Using the Reciprocal method with A and B, respectively, denoting the true costs of warehouse department and Data-center department, the equation that correctly characterizes A is

1. A = 350,000 + 0.25B
2. A = 150,000 + 0.25B
3. A = B+ 50,000
4. A = 350,000 + (3/28)B

Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $150,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $250,000 and $300,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows: Support Departments Production Departments Warehouse Data Center Music Books Department Department | $350,000 $150,000 $125,000 $150,000 NA 1,000 1,500 300 Budgeted costs Budgeted warehouse- hours Number of computer hours 1,000 500 NA / 500 5) Using the direct method, what amount of Warehouse Department costs will be allocated to the Books department? A) $140,000 B) $210,000 C) $150,000 D) $175,000