VelCraft Allocates Costs from Its Payroll Department and the Maintenance

question 137

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: $$\begin{array} { l c c c } \text { Denartment } & \text { Costs } & \begin{array} { c } \text { Number of } \\\text { Emplovees }\end{array} & \begin{array} { c } \text { Number of Square } \\\text { Eeet Occupied }\end{array} \\\hline\text { Payroll } & \$ 150,000 & 2 & 2,000 \\\text { Maintenance } & \$ 220,000 & 8 & 64,000 \\\text { Molding } & & 75 & 100,000 \\\text { Finishing } & & 50 & 60,000 \\\text { Packaging } & & 25 & 40,000\end{array}$$ What amount of the payroll department costs will be allocated to the packaging department?

• A) $23,438
• B) $73,333
• C) $25,000
• D) $36,667

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