Nolin Corporation Uses the Direct Method to Allocate Service Department

question 18

Multiple Choice

Nolin Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Administrative and Facilities, and two operating departments, Assembly and Wholesaling.
Administrative costs are allocated on the basis of employee hours and Facilities costs are allocated on the basis of space occupied. The total Wholesaling Department cost after the allocations of service department costs is closest to:

• A) $418,700
• B) $406,160
• C) $416,273
• D) $418,390

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Definitions:

Benchmarking

The use of external and internal comparisons to plan for future improvements.

Incorporating

The legal process of forming a corporation, which is a type of formal business entity.

Quantitative Forecasting

The use of numerical data and statistical techniques to predict future events or trends.

Statistical Analyses

The process of collecting, examining, interpreting, and presenting data to discover underlying patterns and trends.