Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $400,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $200,000 are allocated based on the number of employees. The costs of operating departments A and B are $240,000 and $360,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
Production
Support DepartmentsDepartments

Using the direct method, what amount of Personnel Department costs will be allocated to Department A? (Do not round any intermediary calculations.)
A) $58,824
B) $52,632
C) $70,588
D) $141,176

Question

Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $400,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $200,000 are allocated based on the number of employees. The costs of operating departments A and B are $240,000 and $360,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
Production
Support DepartmentsDepartments

Using the direct method, what amount of Personnel Department costs will be allocated to Department A? (Do not round any intermediary calculations.)
A) $58,824 
B) $52,632 
C) $70,588 
D) $141,176

Quizplus · Accepted Answer

Personnel Department costs allocated to Department A = 250 / (250 + 600) × $200,000 = $58,824

Hanung Corp Has Two Service Departments, Maintenance and Personnel