Figure 7-6 Oaks Company Has Two Support Departments, Maintenance Department

question 2

Multiple Choice

Figure 7-6 Oaks Company has two support departments, Maintenance Department (MD) and Personnel Department (PD) , and two producing departments, P1 and P2.The Maintenance Department costs of $30,000 are allocated on the basis of standard service used.The Personnel Department costs of $4,500 are allocated on the basis of number of employees.The direct costs of Departments P1 and P2 are $9,000 and $15,000, respectively.
Data on standard service hours and number of employees are as follows:

- Refer to Figure 7-6.Using the sequential method, if the support department with the highest percentage of interdepartmental service is allocated first, the cost of the support departments allocated to Department P1 is

• A) $12,750.
• B) $24,000.
• C) $20,295.
• D) $21,750.

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Definitions:

Gastric Acid

The digestive fluid produced by the stomach, primarily composed of hydrochloric acid, which helps in food digestion.

Esophagus

The muscular tube that conveys food and liquids from the mouth to the stomach.

Anaphylactic Shock

A severe, often fatal form of shock characterized by smooth muscle contraction and capillary dilation initiated by cytotropic (IgE class) antibodies.

Epinephrine

A hormone and medication, also known as adrenaline, that increases heart rate, contracts blood vessels, dilates air passages, and participates in the fight-or-flight response.