The Lots More Store Has a Janitorial Department and a Personnel

question 73

Multiple Choice

The Lots More Store has a Janitorial Department and a Personnel Department that provide services to three Sales Departments.The Janitorial Department cost is allocated based on space and the Personnel Department cost is allocated because of employees.The following information is available.Using the step-down method,calculate the amount of Personnel Department cost allocated to Sales Department #3,if the Personnel Department is allocated first.

• A) $13 500
• B) $12 857
• C) $12 000
• D) $15 000

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Definitions:

Overapplied Overhead

A situation where the estimated manufacturing overhead cost is more than the actual overhead incurred during a period.

Value Chain

A model that describes the full range of activities needed to create a product or service, from initial conception through the various phases of production to the final customer.

Service Entity

An organization or a part of an organization that provides services to customers or internal partners.

Merchandising Entity

A type of business that purchases finished goods for resale, earning a profit by selling these goods at a higher price.