Pederson Company Has Two Service Departments (Cafeteria and Human Resources)

question 21

Multiple Choice

Pederson Company has two service departments (Cafeteria and Human Resources) and two production departments (Machining and Assembly) . The number of employees in each department follows. $$\begin{array} { l r } \text { Cafeteria } & 40 \\\text { Human Resources } & 60 \\\text { Machining } & 200 \\\text { Assembly } & 300\end{array}$$ Pederson uses the direct method of cost allocation and allocates cost on the basis of employees. If Human Resources cost amounts to $1,800,000, how much of the department's cost would be allocated to Assembly?

• A) $900,000.
• B) $720,000.
• C) $1,080,000.
• D) $1,200,000.
• E) None of the other answers are correct.

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