Apex Metallurgy,Inc

question 44

Multiple Choice

Apex Metallurgy,Inc.has two service departments (Human Resources and Building Maintenance) and two production departments (Machining and Assembly) .The company allocates Building Maintenance cost on the basis of square footage and Human Resources cost on the basis of employees.It believes that Building Maintenance provides more service than Human Resources.The square footage and employees in each department follow.
Assuming use of the step-down method,which of the following choices correctly denotes the number of square feet and employees over which the Building Maintenance cost and Human Resources cost would be allocated (i.e. ,spread) ?

• A)Choice A
• B)Choice B
• C)Choice C
• D)Choice D
• E)Choice E

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Definitions:

Fair Market Value

The estimated price at which an asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Book Values

A term used in accounting to refer to the value of an asset as reported on the company's balance sheet, calculated as the cost of an asset minus any depreciation or amortization.

Original Costs

The initial amount spent to acquire an asset, including purchase price and all expenses incurred to bring the asset to its intended use.

Written Agreement

A formal contract which outlines the terms and conditions between parties in written form.