Hanung Corp Has Two Service Departments, Maintenance and Personnel

question 113

Multiple Choice

Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $170,000 are allocated based on the number of employees. The costs of operating departments A and B are $188,000 and $282,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
Production
Support DepartmentsDepartments

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

• A) $44,737
• B) $50,000
• C) $107,368
• D) $120,000

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Definitions:

Organisation

An entity comprising multiple people, such as a company or business, that has a particular purpose and structured system for achieving its goals.

Cost Containment

Strategies and actions taken by an organization to control or reduce its expenses without compromising the quality of its products or services.

Production Targets

Specific goals set for the amount of products to be produced within a certain timeframe.

Performance Efficiency

The relationship between the resources expended and the results achieved, indicating how well an entity uses resources to produce outputs.