The Kelsey Manufacturing Company Ltd Has Two Production Departments (Assembly

question 61

Multiple Choice

The Kelsey Manufacturing Company Ltd has two production departments (Assembly and Finishing) and two support departments (Janitorial and Personnel) . The usage of the two support departments in 2012 is as follows:
The budgeted costs in the support departments of 2012 were as follows:
Using the direct method, what is the Personnel Department cost allocated to the Assembly Department?

• A) $60 000
• B) $54 000
• C) $21 053
• D) $78 842

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Definitions:

LIFO Inventory Method

An accounting method where the last items of inventory purchased are the first ones used or sold, affecting the cost of goods sold and ending inventory values.

FIFO Inventory Method

A method of accounting for inventory that assumes the first items placed in inventory are the first sold.

Balance Sheet

A document that provides a snapshot of a corporation's assets, debts, and shareholder's equity at a given point in time.

Increasing Unit Costs

Refers to the situation where the cost to produce or purchase a single unit of product rises, often due to inflation, increased material costs, or labor costs.