Use This Information to Answer the Following Questions

question 42

Multiple Choice

Use this information to answer the following Questions
Rave Reviews Company has two service departments (Cafeteria and Human Resources) and two production departments (Machining and Assembly) . The number of employees in each department follows.

-Rave Reviews uses the direct method of cost allocation and allocates cost on the basis of employees. If Human Resources cost amounts to $1,800,000, how much of the department's cost would be allocated to Assembly?

• A) $900,000.
• B) $720,000.
• C) $1,080,000.
• D) $1,200,000.
• E) None of the answers is correct.

---

Definitions:

PIKs

Short for "Payment in Kind," a type of financing or loan where the borrower can pay interest or dividends with additional securities instead of cash.

Mortgage Bond

A type of bond secured by a mortgage on one or more assets, offering the bondholder a claim against the assets in case of default.

Securities

Financial instruments that represent an ownership position in a corporation (stocks), a creditor relationship with a governmental body or a corporation (bonds), or rights to ownership as represented by an option.

Equipment

Tangible property other than land or buildings that is used in the operations of a business, such as machinery, tools, or vehicles.