Reddin Corporation Has Two Service Departments, Administrative and Facilities, and Two

question 25

Multiple Choice

Reddin Corporation has two service departments, Administrative and Facilities, and two operating departments, Assembly and Customer Solutions.

The company uses the direct method to allocate service department costs to operating departments. Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied.
-The total Customer Solutions Department cost after the allocations of service department costs is closest to:

• A)$674,310
• B)$686,040
• C)$683,705
• D)$686,473

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Definitions:

External Failure Cost

Costs incurred when a product fails to meet quality standards after it has been delivered to the customer, including warranty claims and returns.

Warranty Work

Repair or replacement services performed for customers at no charge, covered under a product's warranty period to ensure satisfaction and compliance with standards.

Production Costs

The total cost incurred by a business to manufacture a product, including labor, materials, and overhead expenses.

Finished Goods

Products that have completed the manufacturing process but have not yet been sold or distributed to the end customer.