Kenneth Company Has Two Service Departments, Maintenance and Personnel, as Well

question 129

Multiple Choice

Kenneth Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year: $\begin{array}{lllll}&\text { Maintenance }&\text { Personnel }&\text { Mixing }&\text { Finishing }\\\text { Direct dept.costs }&\$126,000&\$105,000&\$175,000&\$84,000\\\text { Square footage } & 800 & 400 & 1,600 & 1,200 \\\text { Number of employees } &8 & 12 & 24 & 32\end{array}$ If the step- down method of allocating costs is used and the Personnel Department is allocated first, then the amount of overhead that would be allocated from Personnel to Finishing is:

• A) $105,000
• B) $42,000
• C) $31,500
• D) $72,000

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Definitions:

Federal Government

The national government of a federated state, which holds the highest level of authority in the country, responsible for national defense, foreign policy, and other matters of national importance.

Park Managers

Individuals responsible for overseeing the operations, maintenance, and administrative functions of parks to ensure they meet the needs of visitors and conserve natural resources.

Visitor Desires

The interests and preferences of individuals visiting a particular place or event, which can significantly influence their behaviors and choices.

Monopolist

A market participant who has exclusive control over the supply of a particular good or service, allowing them to set prices without competition.