Ransall Auto Parts has two service departments-maintenance and personnel, and three production departments-fabrication, assembly, and packaging.Service costs are allocated to producing departments using the direct method.Information on overhead in each department and possible allocation bases appear below: $\begin{array}{lrrrrr}&\text { Maintenance}&\text { Personnel }&\text {fabrication }&\text {Assembly }&\text {Packaging }\
\text { Cost } & \$ 90,000 & \$ 130,000 & & & \
\text { Machine hours } & & & 12,000 & 30,000 & 18,000 \
\text { Employees } & 4 & 16 & 24 & 30 & 26
\end{array}$ Using the most logical activity base, how much maintenance cost will be allocated to the personnel department?
A)$26,000
B)$39,000
C)$18,000
D)$0

Question

Quizplus · Accepted Answer

Maintenance costs are typically allocated to production departments based on relevant activity bases (like machine hours or labor hours), not to other service departments like personnel. Therefore, no maintenance cost would be allocated to the personnel department.

Ransall Auto Parts Has Two Service Departments-Maintenance and Personnel, and Three