VelCraft Allocates Costs from Its Payroll Department and the Maintenance

question 7

Multiple Choice

VelCraft allocates costs from its payroll department and the maintenance department to its production departments using the direct method of allocation. Payroll department costs are allocated based on the number of employees in the department and maintenance department costs are allocated based on the number of square feet that the production department occupies within the factory. Information about the departments is presented below: $$\begin{array} { l c c c } \text { Denartment } & \text { Costs } & \begin{array} { c } \text { Number of } \\\text { Emplovees }\end{array} & \begin{array} { c } \text { Number of Square } \\\text { Eeet Occupied }\end{array} \\\hline\text { Payroll } & \$ 150,000 & 2 & 2,000 \\\text { Maintenance } & \$ 220,000 & 8 & 64,000 \\\text { Molding } & & 75 & 100,000 \\\text { Finishing } & & 50 & 60,000 \\\text { Packaging } & & 25 & 40,000\end{array}$$ When the payroll department costs are allocated, what is the amount per employee that will be charged to each of the departments?

• A) $937.50
• B) $15,000
• C) $6.67
• D) $1,000

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Definitions:

Magnetic Fields

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Electrolyte

A substance, such as the sulfuric acid and water mix used in a battery, that contains free ions that make the substance electrically conductive.

Sulfuric Acid

A highly corrosive strong mineral acid with molecular formula H₂SO₄, used in various applications including battery acid.

Lead Acid Battery

A type of rechargeable battery that uses plates of lead and an acid electrolyte to generate electricity, commonly used in vehicles.