Ransall Auto Parts Has Two Service Departments-Maintenance and Personnel, and Three

question 55

Multiple Choice

Ransall Auto Parts has two service departments-maintenance and personnel, and three production departments-fabrication, assembly, and packaging.Service costs are allocated to producing departments using the direct method.Information on overhead in each department and possible allocation bases appear below: $\begin{array}{lrrrrr}&\text { Maintenance}&\text { Personnel }&\text {fabrication }&\text {Assembly }&\text {Packaging }\\\text { Cost } & \$ 90,000 & \$ 130,000 & & & \\\text { Machine hours } & & & 12,000 & 30,000 & 18,000 \\\text { Employees } & 4 & 16 & 24 & 30 & 26\end{array}$ Using the most logical activity base, how much maintenance cost will be allocated to packaging?

• A)$3,600
• B)$27,000
• C)$33,750
• D)$30,000

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Definitions:

Microwave Oven

An electric oven that uses microwaves to heat or cook food by causing water molecules in the food to vibrate and produce heat.

Repair

The action of fixing or restoring something that is broken or damaged.

Possession

The state of having, owning, or controlling something, legally or factually.

Carrier

A business that undertakes to transport persons, goods, or both.