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

question 52

Multiple Choice

Wenzel Company has two service departments,Maintenance and Human Resources.Wenzel 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:
$\begin{array}{llll}&&\text { Human }\\&\text { Maintenlance }&\text { Resources } & \text { Mixing } & \text { Finishing } \\\text { Direct costs }& \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \\\text { Square footage }&1,600 & 800 & 3,200 & 2,400 \\\text { Number of employees }&16 & 24 & 48 & 64\end{array}$
Assume the step-down method is used to allocate service department costs and the Maintenance Department is allocated first.What amount of costs would be allocated from the Maintenance Department to the Human Resources Department?

• A) $0
• B) $5,040
• C) $6,300
• D) $16,800

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Definitions:

Taxpayers

Individuals or entities that are required to pay taxes to a governing body, contributing to public revenue for governmental spending.

Leachate

Liquid that has percolated through a solid and leached out some of its constituents, often used in the context of water passing through waste material in landfills.

Contaminated Water

Water that has been polluted by chemical substances, bacteria, or other pathogens, making it unsafe for human consumption and use.

Percolates

The movement of water or other liquids through a porous medium, often referring to the process of water filtering through soil layers.