(Appendix 4B) Anchor Corporation Has Two Service Departments, Personnel and Engineering

question 46

Multiple Choice

(Appendix 4B) Anchor Corporation has two service departments, Personnel and Engineering, and two operating departments. The costs of the Personnel Department are allocated to other departments on the basis of the number of employees in the departments. Departments and number of employees are as follows:
Costs in the Personnel Department total $168,283 per year.
-Assuming that SJM allocates service department costs using the direct method,the total cost allocated from Maintenance to Processing would be closest to:

• A) $21,600
• B) $18,783
• C) $26,400
• D) $20,571

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Definitions:

Commercial Paper

An unsecured, short-term debt instrument issued by a corporation, typically used for the financing of payroll, accounts payable, inventories, and meeting other short-term liabilities.

Price

The amount of money required to purchase a good, service, or asset.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's cost.

Simple Interest

Interest that is determined just on the original amount, or on the remaining unpaid portion of that amount.