Question

17. Hanung Corp has two service​ departments, Maintenance and Personnel. Maintenance Department costs of

$ 340 comma 000$340,000

are allocated on the basis of budgeted

maintenanceminus−hours.

Personnel Department costs of

$ 140 comma 000$140,000

are allocated based on the number of employees. The costs of operating departments A and B are

$ 192 comma 000$192,000

and

$ 288 comma 000$288,000​,

respectively. Data on budgeted

maintenanceminus−hours

and number of employees are as​ follows:

                                                                                                                   

	Support Departments		Production Departments
	Maintenance Department	Personnel Department	A	B
Budgeted costs	$ 340 comma 000$340,000	$ 140 comma 000$140,000	$ 192 comma 000$192,000	$ 288 comma 000$288,000
Budgeted maintenanceminus−hours	NA	810810	1 comma 2101,210	600600
Number of employees	7575	NA	300300	630630

Using the direct​ method, what amount of Maintenance Department costs will be allocated to Department​ B? (Do not round any intermediary​ calculations.)

A.

$ 112 comma 707$112,707

B.

$ 77 comma 863$77,863

C.

$ 95 comma 470$95,470

D.

$ 159 comma 116$159,116

Answer 1

Option (A) is correct - $112,707

Using Direct Method,

Amount of Maintenance department cost allocated to Department B :

340,000*600/(1210+600)

$                                                                                112,707