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 B costs allocated to Department C would be
A) $192,000.
B) $160,000.
C) $128,000.
D) $180,000.

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 B costs allocated to Department C would be
A) $192,000. 
B) $160,000. 
C) $128,000. 
D) $180,000.

Quizplus · Accepted Answer

Using the direct method, we allocate Department B's $512,000 costs to the producing departments based on maintenance hours. Department C has 80,000 maintenance hours (50% of total), so it is allocated $256,000 in B's costs. Therefore, Department C's total allocated costs would be $760,000 ($504,000 from Department A, $256,000 from Department B).

Use the Following Information to Answer Item(s) Below