The Kelsey Manufacturing Company Ltd Has Two Production Departments (Assembly

question 67

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 step-down method, what is the amount of Janitorial Department cost allocated to the Assembly Department with the Personnel Department cost allocated first?

• A) $24 842
• B) $28 948
• C) $34 158
• D) $23 600

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Definitions:

Contractual Agreement

A legally binding agreement between two or more parties, typically involving the exchange of goods, services, money, or promises.

Financial Statements

Formal records of the financial activities and condition of a business, entity, or individual, including balance sheet, income statement, and cash flow statement.

Acquisition Differential

The gap between what a company is bought for and the net market value of its recognizable assets and liabilities.

Joint Venture

A business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance.