Maintenance Cost Is Allocated to Wakshaw's Three Producing Departments Based

question 125

Multiple Choice

Maintenance cost is allocated to Wakshaw's three producing departments based on the machine hours used in each department.The maintenance cost expected for June is $200,000.The three departments had the following usage for June: $\begin{array}{lrr}&\text { Meek }&\text { Mild }\\\text { Sales } & \$ 600,000 & \$ 400,000 \\\text { Direct materials } & \$ 100,000 & \$ 120,000 \\\text { Direct labor cost } & \$ 108,000 & \$ 180,000 \\\text { Labor hourly cost } & \$ 12,00 & \$ 12,00\end{array}$ How much maintenance cost should be allocated to the fabrication department for June?

• A)$60,000
• B)$100,000
• C)$66,667
• D)$6,000

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Definitions:

Sales To Invested Assets

A financial ratio that measures how efficiently a company uses its invested assets to generate sales.

Residual Income

The amount of net income generated beyond the minimum rate of return or benchmarks set by a business or investor.

Minimum Acceptable Return

The lowest return on investment that a manager or investor is willing to accept, often used in capital budgeting and investment planning.

Performance Measure

A metric or indicator used to assess the efficiency, effectiveness, and success of an organization's operations or employees.