Hunghi Company Has Three Support Departments Whose Direct Department Costs

question 107

Multiple Choice

Hunghi Company has three support departments whose direct department costs are $35,000, $45,000, and $55,000, respectively, and two producing departments whose direct department costs are $400,000 and $360,000, respectively. The combined total department cost for the producing departments after allocation of the support departments is

• A)$360,000.
• B)$760,000.
• C)$895,000.
• D)$135,000.

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Definitions:

Operating Expenses

The costs associated with the day-to-day activities of running a business, not including the cost of goods sold.

Cost of Merchandise Sold

The direct costs attributable to goods sold by a company, including the purchase price of merchandise, freight, and handling charges, less any discounts received.

Retail Business

A business entity that sells goods or services directly to consumers.

Service Business

A business that provides intangible products or services to customers.