CakeCo, Inc A) $400
B) $1,200

question 40

Multiple Choice

CakeCo, Inc. has three operating departments. Information about these departments is listed below. Maintenance is service department at CakeCo that incurred $12,000 of costs during the period. If allocated maintenance cost is based on floor space occupied by each of the operating departments, compute the amount of maintenance cost allocated to the Baking Department. $$\begin{array} { l r r r } & \text { Mixing } & \text { Baking } & \text { Packaging } \\\text { Direct costs } & 21,000 & 15,000 & 9,000 \\\text { Sq. ft. of space } & 1,000 & 1,500 & 500\end{array}$$

• A) $400.
• B) $1,200.
• C) $4,000.
• D) $7,500.
• E) $6,000.

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Definitions:

Adverse Selection

A situation where asymmetric information leads to the selection of undesirable risks or goods, particularly noticeable in insurance and finance markets.

Labor Market

The supply and demand for labor, where employers seek to hire employees, and individuals offer their work or services.

Screening

The process of evaluating or examining something to ascertain its condition or identify the presence of something.

Signals

Actions or indicators that convey information or intentions in various contexts, such as economics, where they can indicate future behavior or trends.