Stevie Company Has Two Service Departments,Maintenance and Human Resources If the Direct Method Is Used to Allocate Service Department

question 59

Multiple Choice

Stevie Company has two service departments,Maintenance and Human Resources.Stevie 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:
$\begin{array}{llll}&&\text { Human }\\&\text { Maintenlance }&\text { Resources } & \text { Mixing } & \text { Finishing } \\\text { Direct costs } & \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \\\text { Square footage } & 1,600 & 800 & 3,000 & 2,000 \\\text { Number of employees } & 16 & 24 & 40 & 60\end{array}$
If the direct method is used to allocate service department costs,then the cost allocated from the Maintenance Department to the Mixing Department is ________.

• A) $20,160
• B) $25,200
• C) $30,240
• D) $50,400

---

Definitions:

Accounting Records

Documentation and books used to prepare financial statements and track financial transactions.

Manufacturing Companies

Manufacturing companies are businesses that produce physical goods from raw materials using various processes, machinery, and operations.

Merchandising Companies

Businesses that purchase goods in finished form for the purpose of reselling them to customers without further processing.

Resale

Resale refers to the process of selling a previously purchased product, generally used or surplus items, to another buyer.