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:

Accounts Receivable

The money owed to a company by its customers for goods or services delivered on credit.

Cash Realizable Value

The amount of money that could be received from selling or disposing of an asset after accounting for all associated costs.

Accrued Interest

Interest that has accumulated over a period of time but has not yet been paid.

Merchandise Sale

The transaction of selling goods that are purchased for resale by a business.