Answer the Following Questions Using the Information Below:
Goldfarb's Book

question 22

Multiple Choice

Answer the following questions using the information below:
Goldfarb's Book and Music Store has two service departments, Warehouse and Data Center. Warehouse Department costs of $350,000 are allocated on the basis of budgeted warehouse-hours. Data Center Department costs of $150,000 are allocated based on the number of computer log-on hours. The costs of operating departments Music and Books are $250,000 and $300,000, respectively. Data on budgeted warehouse-hours and number of computer log-on hours are as follows:
$$\begin{array} { | l | c | c | c | c | } \hline & { \text { Support Departments } } &&{ \begin{array} { c } \text { Production } \\\text { Departments }\end{array} } \\\hline & \begin{array} { c } \text { Warehouse } \\\text { Department }\end{array} & \begin{array} { c } \text { Data Center } \\\text { Department }\end{array} & \text { Music } & \text { Books } \\\hline \text { Budgeted costs } & \$ 350,000 & \$ 150,000 & \$ 125,000 & \$ 150,000 \\\hline \text { Budgeted warehouse-hours } & \text { NA } & 500 & 1,000 & 1,500 \\\hline \text { Number of computer hours } & 200 & \text { NA } & 800 & 1,000 \\\hline\end{array}$$
-Using the step-down method,what amount of Warehouse Department cost will be allocated to Department Music if the service department with the highest percentage of interdepartmental support service is allocated first? (Round up)

• A) $233,333
• B) $116,667
• C) $243,333
• D) $121,667

---

Definitions:

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal, over a specific period.

Subnormal Activity

Activities or economic conditions below the standard or average level, often indicative of a slowdown or recession.

John Maynard Keynes

A British economic thinker whose insights led to significant shifts in macroeconomic practices and the economic approaches of governments.

Economy

The organized system of human activity involved in the production, consumption, and trading of goods and services.