Bender Company has two service departments,Maintenance and Human Resources.Bender Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while Human Resources costs are allocated based on number of employees.The following information has been gathered for the current year:
$\begin{array}{llll}&&\text { Human }\
&\text { Maintenlance }&\text { Resources } & \text { Mixing } & \text { Finishing } \
\text { Direct costs }& \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \
\text { Square footage }&1,600 & 800 & 3,200 & 2,400 \
\text { Number of employees }&16 & 24 & 48 & 64
\end{array}$
If the direct method is used to allocate service department costs,then the total cost of the Maintenance Department after the Human Resources Department cost allocation would be ________.
A) $33,600
B) $50,400
C) $54,600
D) $70,000

Question

Quizplus · Accepted Answer

The direct method allocates service department costs directly to the producing departments without any allocation between service departments. Therefore, the total cost of the Maintenance Department remains unchanged at its direct cost of $50,400 after the Human Resources Department cost allocation, because the direct method does not involve reallocating costs between service departments.

Bender Company Has Two Service Departments,Maintenance and Human Resources If the Direct Method Is Used to Allocate Service Department