Licorice, Inc

question 23

Multiple Choice

Licorice, Inc., has two producing departments, P1 and P2, and two support departments, A and B. Department A serves Departments P1 and P2 in the percentages 45 percent and 55 percent. Department B serves Departments A, P1, and P2 in the percentages 15 percent, 55 percent, and 30 percent. Direct department costs for P1, P2, A, and B are $90,000, $84,000, $15,000, and $10,000, respectively. Compute the total costs to be allocated from Department A.

• A)$15,000
• B)$16,500
• C)$18,000
• D)$17,250

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Definitions:

Minimum Cash Balance

The least amount of cash a business decides to keep on hand to meet immediate needs, often set as a part of cash management policies.

Cash Excess

Cash excess refers to the situation where a company or individual has more liquid cash available than is necessary for current operations or investments.

Master Budget

A comprehensive financial planning document that includes all of the smaller, individual budgets within an organization, projecting all major financial activities.

Static Budget

A static budget is a fixed budget that does not change or adjust in response to changes in business activity levels, such as sales volume or production capacity, during the budget period.