Goldfarb's Book and Music Store Has Two Service Departments, Warehouse

question 50

Multiple Choice

Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $370,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $180,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $137,500 and $165,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
Production
Support DepartmentsDepartments

Using the direct method, what amount of Data Center Department costs will be allocated to Department Music? (Do not round any intermediary calculations.)

• A) $180,000
• B) $83,505
• C) $96,495
• D) $75,349

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Definitions:

Profit Margin

A financial metric used to evaluate a company's profitability by comparing net income to revenue, often expressed as a percentage.

Total Asset Turnover

Total Asset Turnover is a financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue.

Return on Total Assets

A financial ratio that measures a company's profitability in relation to its total assets, indicating how effectively a company uses its assets to generate earnings.

Trading (Debt) Securities

Financial instruments, such as bonds or notes, that are bought and sold with the intention of making a profit from short-term price fluctuations.