The Thomas Corporation Has Two Service Departments and Two Operating

question 216

Multiple Choice

The Thomas Corporation has two service departments and two operating departments. The following data are available for a recent period: Thomas allocates service department costs by the step-down method in the following order: Administrative Department costs are allocated first, based on number of employees; Custodial Department costs are allocated second, based on square feet occupied. No distinction is made between fixed and variable costs.After all allocations, the total amount of overhead cost contained in the Assembly Department will be:

• A) $152,333
• B) $168,550
• C) $150,200
• D) $155,700

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Definitions:

Flotation Cost

The total costs incurred by a company in issuing new securities, including underwriting, legal, registration, and other expenses.

Cost of Capital

The rate of return a company must pay to its shareholders and debt holders, representing the cost of obtaining funds to finance its operations.

Long-Term Funds

Investments or sources of financing that are provided or required for a duration exceeding one year.

Acquisition of Assets

The process by which a company purchases or obtains assets, such as property, equipment, or other resources, to enhance its business operations.