The Hsu Manufacturing Company Has Two Service Departments: Maintenance and Accounting.The

question 56

Multiple Choice

The Hsu Manufacturing Company has two service departments: Maintenance and Accounting.The Maintenance Department's costs of $300,000 are allocated on the basis of machine hours.The Accounting Department's costs of $120,000 are allocated on the basis of the number of employees within a specific department.The direct departmental costs for A and B are $300,000 and $500,000,respectively. $$\begin{array} { | l | r | r | r | r | } \hline & \text { Maint } & \text { Acctg } & A & B \\\hline \text { Machine hours } & 480 & 20 & 2,300 & 200 \\\hline \text { Number of employees } & 2 & 2 & 8 & 4 \\\hline\end{array}$$ What is the cost of the Accounting Department's cost allocated to Department A using the step method and assuming the Maintenance Department's costs are allocated first?

• A) $81,333.
• B) $81,587.
• C) $80,000.
• D) $68,571.

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