Stoltz Corporation Uses the Direct Method to Allocate Service Department

question 269

Multiple Choice

Stoltz Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Data Processing and Personnel, and two operating departments, Assembly and Finishing. Data Processing Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. The total amount of Data Processing Department cost allocated to the two operating departments is closest to:

• A) $52,451
• B) $18,542
• C) $25,193
• D) $27,258

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Definitions:

Significance Level

A threshold set by the researcher to determine the maximum probability of wrongly rejecting the null hypothesis, commonly denoted as alpha (α) and often set at 0.05 or 5%.

Linearly Related

A relationship between two variables in which the change in one variable is directly proportional to the change in another.

Years of Experience

A measurement of the amount of time an individual has spent in a particular role or industry.

Nominal Variable

A variable that represents categories with labels or names but which does not have an inherent order.