Kovacik manufactures two types of piggy banks, a kangaroo-shaped piggy bank and a platypus-shaped piggy bank, in two separate production departments. The plant is highly automated and contains only two other support departments: (1) engineering and design; and (2) information systems. Kovacik allocates support department costs according to estimated service use. Information for the year just ended was as follows.

	Support		Production
	Engineering and design	Information systems	Kangaroo bank	Platypus bank
Direct costs	$2,700	$8,000	$10,000	$20,000
Service used
Engineering and design	0	10%	40%	50%
Information systems	20%	0	30%	50%

Using step down method, what is the Engineering and design department cost allocated to Platypus bank department (to the nearest dollar)?

A.

$1,911

B.

$1,500

C.

$2,389

D.

$2,150

Answer rating: 100% (QA)

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