Use the following information to answer item(s) below.
Meesen Inc. operates two support departments (A and B) and two producing departments (C and D). Budgeted costs and normal activity levels are given below. The costs of Department A are allocated on the basis of number of employees, and the costs of Department B are allocated on the basis of maintenance hours.
-If the direct method is used, Department A costs allocated to Department C would be
A) $48,000.
B) $96,000.
C) $72,000.
D) $120,000.

Question

Use the following information to answer item(s) below.
Meesen Inc. operates two support departments (A and B) and two producing departments (C and D). Budgeted costs and normal activity levels are given below.  The costs of Department A are allocated on the basis of number of employees, and the costs of Department B are allocated on the basis of maintenance hours.
-If the direct method is used, Department A costs allocated to Department C would be
A) $48,000. 
B) $96,000. 
C) $72,000. 
D) $120,000.

Quizplus · Accepted Answer

The direct method allocates service department costs directly to production departments without considering interactions between service departments. If Department A's costs are $48,000, they are allocated directly to Department C.

Use the Following Information to Answer Item(s) Below