Stoltz Corporation Uses the Direct Method to Allocate Service Department

question 17

Multiple Choice

Stoltz Corporation uses the direct method to allocate service department costs to operating departments.The company has two service departments,Data Processing and Personnel,and two operating departments,Assembly and Finishing. Data Processing Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees.The total amount of Data Processing Department cost allocated to the two operating departments is closest to:

• A) $23,245
• B) $26,488
• C) $61,567
• D) $16,874

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Definitions:

Guaranteed

A promise or assurance that certain conditions will be fulfilled or met.

Skill-Based Pay Programs

Compensation strategies where employees are paid based on the skills, certifications, or knowledge they bring to their position, rather than solely on job title or tenure.

Topping Out Effect

Refers to a situation where growth or improvement reaches a maximum level and no significant advancement seems possible.

Profit-Sharing Programs

A company policy where a portion of the company's profits is distributed to its employees, often based on their performance or as an incentive.