Question
Diane's Pottery Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of
Diane's Pottery Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $30,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows:
Maint. | Person. | Dept. | Dept. | |
Dept. | Dept. | X | Y | |
Standard service hours used | 100 | 75 | 600 | 300 |
Number of employees | 50 | 100 | 150 | 150 |
Direct labor hours | 125 | 125 | 500 | 250 |
What are the total overhead costs associated with Department Y after allocating the Maintenance and Personnel Departments using the direct method?
a.$17,250
b.$15,000
c.$27,250
d.$25,000
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