Suppose the Company Uses the Direct Method of Allocation

question 34

Multiple Choice

Suppose the company uses the direct method of allocation. The amount of Personnel Department cost that would be allocated to Operating Department 2 would be:

• A)$0
• B)$294,000
• C)$270,000
• D)$264,600

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Definitions:

Sales Discounts

Reductions in the price of goods or services offered to customers, typically in exchange for early payment.

Expense Accounts

Accounts used to track the costs incurred in a business's operational activities, not directly tied to the production of goods or services.

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding costs directly associated with the production of goods or services.

Merchandising

Merchandising involves purchasing, displaying, and selling products to consumers, with strategies that aim to boost sales and profitability.