Use This Information to Answer the Following Questions

question 63

Multiple Choice

Use this information to answer the following Questions
Trek, Inc. has two service departments (Human Resources and Building Maintenance) and two production departments (Machining and Assembly) . The company allocates Building Maintenance cost on the basis of square footage and believes that Building Maintenance provides more service than Human Resources. The square footage occupied by each department follows.

-Assuming use of the step-down method, over how many square feet would the Building Maintenance cost be allocated (i.e., spread) ?

• A) 18,000.
• B) 48,000.
• C) 55,000.
• D) 66,000.
• E) More information is needed to judge.

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Definitions:

Profitability Analysis

The process of evaluating the ability of a business to generate earnings as compared to its expenses and other relevant costs incurred during a specific period.

Cost Of Goods Sold

The cost of goods sold is the direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from total sales revenue.

Ratio

A quantitative relationship between two numbers, often used in financial analysis to assess performance, financial health, and operational efficiency.