Russet Company Has Two Service Departments and Two Producing Departments

question 144

Multiple Choice

Russet Company has two Service Departments and two Producing Departments. Budgeted costs and budgeted activity in the various departments for the most recent year are presented below:
$\begin{array} {| l | r | r | r | r | } \hline & \begin{array} { r } \text { Custodial } \\\text { Services }\end{array} & \text { Cafeteria } & \begin{array} { r } \text { Cutting } \\\text { Department }\end{array} & \begin{array} { r } \text { Assembly } \\\text { Department }\end{array} \\\hline \text { Overhead Costs } & \$ 252,000 & \$ 140,000 & \$ 600,000 & \$ 900,000 \\\hline \begin{array} { l } \text { Square Metres of Space } \\\text { Occupied }\end{array} & 1,000 & 2,000 & 8,000 & 10,000 \\\hline \text { Number of Employees } & 20 & 30 & 150 & 200 \\\hline \text { Machine Hour } & & & 40,000 & 60,000 \\\hline\end{array}$ Service Department costs are allocated to Producing Departments with the costs of Custodial Services allocated first on the basis of square metres of space occupied. The costs of the Cafeteria are allocated on the basis of number of employees. Predetermined overhead rates in the Cutting and Assembly departments are based on machine hours. Round all calculations to the nearest dollar.


- Under the direct method of allocation,what would be the predetermined overhead rate for the year in the Assembly Department? (Round your final answer to the nearest two decimal places)

• A) $3.17.
• B) $3.67.
• C) $18.17.
• D) $18.67.

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Definitions:

Parasympathetic Nervous System

A division of the autonomic nervous system that conserves energy as it slows the heart rate, increases intestinal and gland activity, and relaxes sphincter muscles.

Endocrine System

A network of glands in the body that secrete hormones directly into the circulatory system to regulate the body's growth, metabolism, and sexual development and function.

Billion

A numerical value equal to 1,000 million in the American system, and 1,000,000 million in systems that use the long scale.

Adult Brain

The matured human brain, fully developed and capable of complex cognitive, emotional, and behavioral processing.