Oxmoor Corporation Has Two Service Departments (Maintenance and Human Resources)

question 44

Multiple Choice

Oxmoor Corporation has two service departments (Maintenance and Human Resources) and three production departments (Machining, Assembly, and Finishing) . The two service departments service the production departments as well as each other, and studies have shown that Maintenance provides the greater amount of service. On the basis of this information, which of the following cost allocations would likely occur under the step-down method?

• A) Machining cost would be allocated to Assembly.
• B) Maintenance cost would be allocated to Finishing.
• C) Maintenance cost would be allocated to Human Resources.
• D) Human Resources cost would be allocated to Maintenance.
• E) Both maintenance cost would be allocated to Finishing and maintenance cost would be allocated to Human Resources.

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Definitions:

Socialized Power

A form of power wielded with the intention of promoting the common good rather than personal gain, often seen in leadership that prioritizes group goals.

Perceived Probability

An individual's subjective judgment regarding the likelihood of a particular event happening, which may not always align with the actual statistical probability.

Effort

The amount of physical or mental energy expended to achieve a task or goal.

Foundation of Competition

The underlying principles and conditions that drive rivalry among firms in an industry to achieve superiority.