Question
Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department
Jake's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 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 Department | Personnel Department | A | B | ||
Budgeted costs | $320,000 | $80,000 | $160,000 | $240,000 | |
Budgeted maintenance-hours | NA | 800 | 960 | 640 | |
Number of employees | 40 | NA | 160 | 480 | |
Using the direct method, what amount of Maintenance Department costs will be allocated to Department B?
A) $96,000
B) $128,000
C) $156,000
D) $192,000
Using the direct method, what amount of Personnel Department costs will be allocated to Department B?
A) $20,000
B) $32,000
C) $48,000
D) $60,000
Using the step-down method, what amount of Maintenance Department cost will be allocated to Department B if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)
A) $64,000
B) $85,333
C) $114,667
D) $128,000
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