Hopp Corporation Uses the Direct Method to Allocate Service Department

question 35

Multiple Choice

Hopp Corporation uses the direct method to allocate service department costs to operating departments. The company has two service departments, Data Processing and Personnel, and two operating departments, Assembly and Finishing.
Data Processing Department costs are allocated on the basis of computer workstations and Personnel Department costs are allocated on the basis of employees. The total amount of Data Processing Department cost allocated to the two operating departments is closest to:

• A) $29,871
• B) $82,720
• C) $34,689
• D) $21,946

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Definitions:

Laissez-faire Capitalism

An economic system where government intervention in business and markets is minimal, and the forces of supply and demand are allowed to regulate the economy.

Central Planning

A system where economic decisions, such as the allocation of resources, are made by the government or a centralized authority.

Market System

An economic system in which market forces of supply and demand guide the production of goods and services and their distribution.

Property Rights

The theoretical and legal ownership rights assigned to the use, control, and transfer of property, which can be applied to both physical and intellectual properties.