Landslide Company Has Two Service Departments,Maintenance and Human Resources If the Step-Down Method Is Used to Allocate Service Department

question 64

Multiple Choice

Landslide Company has two service departments,Maintenance and Human Resources.Landslide Company also has two production departments,Mixing and Finishing.Maintenance costs are allocated based on square footage while Human Resources costs are allocated based on number of employees.The following information has been gathered for the current year:
$\begin{array}{lllll}&&\text { Human }\\&\text { Maintenance } &\text { Resources } & \text { Mixing } & \text { Finishing }\\\text { Direct costs } & \$ 126,000 & \$ 84,000 & \$ 105,000 & \$ 175,000 \\\text { Square footage } & 800 & 400 & 1,600 & 1,200 \\\text { Number of employees } & 8 & 12 & 24 & 32\end{array}$
If the step-down method is used to allocate service department costs,and the Maintenance Department is allocated first,the amount of costs allocated from the Maintenance Department to the Mixing Department is ________.

• A) $36,000
• B) $42,000
• C) $42,750
• D) $63,000

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Definitions:

Perpetual Scholarship

A scholarship fund that provides financial aid indefinitely, usually through an endowment that generates interest used to fund the scholarship.

Compounded Monthly

This refers to the calculation and addition of interest to the principal sum of a loan or deposit on a monthly basis.

Equal Monthly Payments

Fixed payments made every month, as in a loan or mortgage, ensuring that the loan is paid off over a specified period.

Compounded Monthly

A method where interest earnings are calculated and added to the principal amount each month, allowing the interest to then earn interest in subsequent months.