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

question 104

Multiple Choice

Sanchez Company has two service departments,Maintenance and Human Resources.Sanchez 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:
$\begin{array}{llll}&&\text { Human }\\&\text { Maintenlance }&\text { Resources } & \text { Mixing } & \text { Finishing } \\\text { Direct costs }&\$ 126,000 & \$ 84,000 & \$ 105,000 & \$ 175,000 \\\text { Square footage }&800 & 400 & 1,600 & 1,200 \\\text { Number of employees }&8 & 12 & 24 & 32\end{array}$
Assume the step-down method is used to allocate service department costs and the Maintenance Department is allocated first.What are the total costs of the Mixing Department after the allocation of service department costs?

• A) $210,750
• B) $275,500
• C) $277,000
• D) $279,250

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Definitions:

Amygdala

A section of the brain's limbic system involved in emotion, behavior, and motivation, particularly known for its role in processing fear.

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The nerve that transmits visual information from the retina to the brain.

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A motivational theory suggesting that the primary purpose of behavior is to reduce drives or needs, thereby returning the organism to a state of homeostasis or balance.