Question
M&P Tool has three service departments that support the production area. Outlined below is the estimated overhead by department for the upcoming year: Estimated Number
M&P Tool has three service departments that support the production area. Outlined below is the estimated overhead by department for the upcoming year:
Estimated Number of Service Departments Overhead EmployeesReceiving $25,000 2 Repair 35,000 2 Tool 10,000 1 Production DepartmentsAssembly 25 Bolting 12
The Repair Department supports the greatest number of departments, followed by the Tool Department. Overhead cost is allocated to departments based upon the number of employees.
If M&P uses the step-down method of allocation, the allocation from the Repair Department to the Tool Department would be A. $0 B. $875 C. $7,000 D. $11,667
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