Stoffle Corporation Uses the Direct Method to Allocate Service Department

question 54

Multiple Choice

Stoffle 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)$169,600
• B)$35,787
• C)$29,552
• D)$39,402

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Definitions:

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Investments that can be easily converted into cash without significantly affecting their market price.

Internal Controls

Procedures and policies implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Sarbanes-Oxley Act

A federal law in the United States enacted to protect investors by improving the accuracy and reliability of corporate disclosures.

Committee of Sponsoring Organizations

A voluntary private sector organization dedicated to providing guidance on risk management, governance, and internal control frameworks.