Parker Company Has Two Service Departments, Cafeteria and Engineering, and Two

question 33

Multiple Choice

Parker Company has two service departments, cafeteria and engineering, and two operating departments. The number of employees in each department is given below:
The costs of the Cafeteria are allocated to other departments on the basis of the number of employees in the departments. If these costs are budgeted at $69,375, the amount of cost allocated to Engineering under the direct method would be:

• A) $0
• B) $3,700
• C) $3,750
• D) $17,344

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Definitions:

Merchandising Company

A business that purchases finished goods for resale, making a profit on the sales margin.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, highlighting revenue, expenses, and profits or losses.

Merchandise Inventory

Goods that a company holds with the intent to sell them as part of its business operations; considered a current asset on the balance sheet.

Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company’s financial position at a specific date, showing assets, liabilities, and shareholders’ equity.