Riverview Inc

question 10

Multiple Choice

Riverview Inc. has two service departments (Maintenance and Human Resources) and three production departments (Machining, Assembly, and Finishing) . Maintenance is the largest service department and Assembly is the largest production department. The two service departments service each other as well as the three producing departments. On the basis of this information, which of the following cost allocations would not occur under the direct method?

• A)Maintenance cost would be allocated to Assembly.
• B)Maintenance cost would be allocated to Finishing.
• C)Maintenance cost would be allocated to Machining.
• D)Human Resources cost would be allocated to Finishing.
• E)Maintenance cost would be allocated to Human Resources.

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Definitions:

Positive Externality

A beneficial effect experienced by a third party, resulting from an economic transaction that they are not directly involved in.

Beautiful Lawn

A well-maintained and visually appealing grass area around homes or in parks, often characterized by green, lush, and orderly appearance.

Pollution

The presence or introduction into the environment of substances or things that have harmful or poisonous effects.

Inventory Turnover Ratio

A measure of how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.