Use the Following Information for the Next 3 Questions

question 66

Multiple Choice

Use the following information for the next 3 questions
Pardee, Inc. allocates engineering costs on the basis of the supervisor's time and administration costs on the basis of the number of employees. The company's accountant determined that engineering provides more services to administration than administration provides to engineering. The following data have been collected:
-If the step-down method is used and engineering costs are allocated first, the fraction of engineering costs allocated to the assembly department will be

• A) 35/55
• B) 35/100
• C) 35/70
• D) 35/85

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Definitions:

Absorption Costing

A system of accounting that entails adding all expenses incurred in production, including direct materials, direct labor, and both variable and fixed overheads, into the cost calculation of a product.

Product Cost

The total cost of manufacturing or purchasing a product, including raw materials, labor, and overhead expenses.

Per Unit

A term referring to expressing or measuring amounts for each single item or instance.

Variable Costing

A pricing strategy that incorporates only variable manufacturing expenses such as direct materials, direct labor, and variable factory overhead into the cost of products.