Gustavson Corporation Uses the Direct Method to Allocate Service Department

question 2

Multiple Choice

Gustavson 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)$337,530
• B)$331,090
• C)$340,240
• D)$340,426

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