Parker Company has two service departments-cafeteria and engineering-and two operating departments.The number of employees in each department is given below:
$\begin{array}{|l|r|}
\hline \text { Cafeteria } & 10 \
\hline \text { Engineering } & 40 \
\hline \text { Operating Department 1 } & 500 \
\hline \text { Operating Department 2 } & 200 \
\hline
\end{array}$
The costs of the Cafeteria are allocated to other departments on the basis of the number of employees in the departments.If these costs are budgeted at $69,375,what would be the amount of cost allocated to Engineering under the direct method?
A) $0.
B) $3,700.
C) $3,750.
D) $17,344.

Question

Quizplus · Accepted Answer

Under the direct method, service department costs are allocated only to operating departments, not to other service departments. Therefore, no costs are allocated to Engineering.

Parker Company Has Two Service Departments-Cafeteria and Engineering-And Two Operating