McHugh Company Allocates Common Building Department Costs to Producing Departments

question 142

Multiple Choice

McHugh Company allocates common Building Department costs to producing departments (P1 and P2) based on space occupied, and it allocates common Personnel Department costs based on the number of employees. Space occupancy and employee data are as follows: If McHugh Company uses the sequential allocation method and the support department with the highest percentage
Of interdepartmental services is allocated first, the ratio representing the portion of Personnel Department costs allocated to Department P2 is

• A) 50/130.
• B) 90/140.
• C) 50/140.
• D) 50/146.

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Definitions:

Predictable

Able to be foreseen or declared in advance; capable of being predicted.

Absolute Value

The non-negative value of a real number without regard to its sign; it represents the distance of a number on the number line from the origin.

Budget Line

A graphical representation of all possible combinations of two goods which a consumer can afford given their income and the prices of the goods.

Quantity

Quantity refers to the amount or number of a product or service that is available or demanded in the market at a particular time.