Hopp Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Data Processing and Personnel, and two operating departments, Assembly and Finishing.
Data Processing Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. The total amount of Data Processing Department cost allocated to the two operating departments is closest to:
A) $29,871
B) $82,720
C) $34,689
D) $21,946

Question

Hopp Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Data Processing and Personnel, and two operating departments, Assembly and Finishing. 
Data Processing Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. The total amount of Data Processing Department cost allocated to the two operating departments is closest to:
A) $29,871 
B) $82,720 
C) $34,689 
D) $21,946

Quizplus · Accepted Answer

Since the question mentions that the costs of the Data Processing Department are allocated based on computer workstations and not on employees, we need to look for information on the number of computer workstations in each operating department. Without this information, it is impossible to calculate the allocation of costs.

Hopp Corporation Uses the Direct Method to Allocate Service Department