Pardee, Inc

question 122

Multiple Choice

Pardee, Inc. allocates engineering costs on the basis of the supervisor's time and administration costs on the basis of the number of employees. The company's accountant determined that engineering provides more services to administration than administration provides to engineering. The following data have been collected: Support Departments Operating Departments
Engineering Administration Assembly Finishing
Direct costs $25,000 $15,000 $200,000 $350,000
Number of employees 15 10 300 450
Engineering supervisor's time 30% 15% 35% 20%
If the step-down method is used and engineering costs are allocated first, the fraction of engineering costs allocated to the assembly department will be:

• A)35/55
• B)35/100
• C)35/70
• D)35/85

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