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

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Definitions:

Health Spending Accounts

Tax-free accounts that employers can provide to employees for the purpose of paying for healthcare expenses not covered by insurance.

Flexible Benefit Programs

Employee benefit plans that allow individuals to choose from a range of benefits to customize a package that best suits their personal needs.

Benefit Audit

A system to control the efficiency of a benefit program.

Claims Audit

An examination and verification of claims made under insurance policies or benefit programs to ensure accuracy and compliance.