Answer the Following Questions Using the Information Below

question 27

Multiple Choice

Answer the following questions using the information below:
Murray River Cruises Company has two service departments,Maintenance and Personnel.Maintenance Department costs of $160 000 are allocated on the basis of budgeted maintenance-hours.Personnel Department costs of $40 000 are allocated based on the number of employees.The costs of operating departments A and B are $80 000 and $120 000,respectively.Data on budgeted maintenance-hours and number of employees are as follows:

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

• A)$57 334
• B)$42 667
• C)$32 000
• D)$64 000

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Definitions:

Right to Participate

A term indicating the entitlement of an individual or entity to take part in certain activities or to have a share in certain rights or benefits.

Income-sharing Ratio

The proportion at which profits or losses are divided among participants in a joint venture or partnership agreement.

Capital Balances

The amounts reflected in a company's accounts representing the capital invested by its owners.