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Boa CorpUses the Direct Method to Allocate Service Department Overhead Costs

Question 36

Multiple Choice

Boa Corp.uses the direct method to allocate service department overhead costs to operating departments.Information for the month of June follows:
 Service  Maintenance  Departments Utilities  Departmental cost incurred $20,000$10,000 Service provided to departments:  Maintenance 10% Utilities 20% Operating - A 40%30% Operating - B 40%60%\begin{array}{|l|r|r|} \hline& \begin{array}{r}\text { Service } \\\text { Maintenance }\end{array} & \text { Departments Utilities } \\\hline \text { Departmental cost incurred } & \$ 20,000 & \$ 10,000 \\\hline \text { Service provided to departments: } & & \\\hline \text { Maintenance } & & 10 \% \\\hline \text { Utilities } & 20 \% & \\\hline \text { Operating - A } & 40 \% & 30 \% \\\hline \text { Operating - B } & 40 \% &60 \% \\\hline\end{array}
What would be the amount of maintenance department costs allocated to Operating Department A for June?


A) $8,000.
B) $8,800.
C) $10,000.
D) $20,000.

Correct Answer:

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