Motlop Manufacturing
the Motlop Manufacturing Company Has Two Service Departments

question 59

Multiple Choice

Motlop Manufacturing
The Motlop Manufacturing Company has two service departments and two producing departments. The following data are available for 2013.
$\begin{array}{lcccc} &\text { Service }&\text { Service } & \text { Producing } & \text { Producing }\\&\text { Dept. 1 }&\text { Dept. 2 }&1&2\\\hline \text { Department Costs } & \$ 10000 & \$ 15000 & \$ 90000 & \$ 70000 \\\text { Machine hours } & 10000 & 5000 & 10000 & 20000 \\\text { Labour hours } & 5000 & 5000 & 12000 & 8000\end{array}$
The costs of service departments 1 and 2 are allocated on the basis of machine hours and labour hours respectively. Service department 1 is allocated first.
-Assuming that Motlop Manufacturing Company allocates service department 1 costs first,the amount of service department 1 costs allocated to Producing 2 under the direct method would be:

• A) $6667
• B) $3333
• C) $6500
• D) $3500

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Definitions:

Unemployment Compensation Tax

A tax paid by employers based on the wages of their employees, used to fund the unemployment insurance program.

Social Security Tax

Mandatory contributions collected from employees and employers to fund the Social Security program, providing benefits for retirees, the disabled, and survivors.

Medicare Tax

A federal tax deducted from employees' paychecks to fund the Medicare program, which provides health insurance for individuals aged 65 and over.

Social Security Tax

A tax levied on both employers and employees to fund the Social Security program, which provides benefits for retirees, disabled persons, and survivors.