Lithium Company Has Two Support Departments, the Maintenance Department and the Security

question 72

Multiple Choice

Lithium Company has two support departments, the Maintenance Department and the Security Department, and two producing departments, Molding and Finishing. Standard service hours used by the departments is considered the basis to allocate Maintenance Department costs of $40,000 and the number of employees in each department is considered the basis to allocate Security Department costs of $24,000. The direct costs of the Molding Department and the Finishing Department are $96,000 and $105,000, respectively. Data on standard service hours and number of employees are as follows:
$\begin{array}{lrrrr}&\text { Maintenance }& \text { Security } & \text { Molding } & \text { Finishing }\\&\text { Department} &\text { Department} &\text { Department} &\text { Department} \\\text { Standard service hours used } & 200 & 100 & 850 & 1,150 \\\text { Number of employees } & 15 & 20 & 450 & 350 \\\text { Direct labor hours } & 100 & 50 & 1,150 & 1,350\end{array}$
Calculate the total overhead costs associated with the Molding Department after allocating the Maintenance and Personnel Department costs using the direct method.

• A)$125,000
• B)$126,500
• C)$113,000
• D)$109,500

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Definitions:

Central

Being at or forming the centre, often considered the most important part or aspect.

Primacy

An order of presentation effect in which earlier presented information has a disproportionate influence on social cognition.

Prototypes

Original models or early drafts used to test a concept or process, serving as a benchmark for future designs.

Organisational Psychology

The scientific study of human behavior in organizational settings, focusing on workplace dynamics and improving employee wellbeing.