Question
Answer the following questions using the information below: Company ABC has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated based
Answer the following questions using the information below:
Company ABC has two service departments, Maintenance and Personnel.
Maintenance Department costs of $300,000 are allocated based on budgeted maintenance-hours.
Personnel Department costs of $100,000 are allocated based on the number of employees.
The costs of operating departments A and B are $160,000 and $240,000, respectively.
Data on budgeted maintenance-hours and number of employees are as follows:
|
| Support Departments | Production Departments |
| ||
|
| Maintenance | Personnel | A | B | |
| Budgeted costs | $300,000 | $100,000 | $160,000 | $240,000 | |
| Budgeted maintenance-hours | NA | 1,000 | 600 | 400 | |
| Number of employees | 40 | NA | 160 | 480 | |
Using the step-down method, what amount of Personal Department cost will be allocated to Departments A and Department B?
| A. | $160,000 and $96,000 | |
| B. | $62,500 and $187,500 | |
| C. | $60,00 and $180,000 | |
| D. | None of them |
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Managerial Accounting
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips
2nd edition
9780077493677, 78025516, 77493672, 9780077826482, 978-0078025518
