Answer the Following Question(s)using the Information Below

question 37

Multiple Choice

Answer the following question(s) using the information below:
Betty's Book and Music Store has two service departments, Warehouse and Data Centre.Warehouse Department costs of $175,000 are allocated on the basis of budgeted warehouse-hours.Data Centre Department costs of $75,000 are allocated based on the number of computer log-on hours.The costs of operating departments Music and Books are $125,000 and $150,000, respectively.Data on budgeted warehouse-hours and number of computer log-on hours are as follows:

-Using the step-down method, what amount of Warehouse Department cost will be allocated to Music Department if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)

• A)$58,333
• B)$116,667
• C)$60,833
• D)$121,667
• E)$0

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Definitions:

Unrealized Intercompany Profits

Profits that arise from transactions between entities within the same group, not yet realized until sold to an external party.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income levels, jurisdictions, and types of taxes.

Cash

The most liquid form of financial assets, readily available for transactions.

Consolidated Balance Sheet

A balance sheet that combines the assets, liabilities, and equity of a parent company with those of its subsidiaries, removing intercompany transactions.