Evergreen Company Has Two Support Departments (S1 and S2) and Two

question 151

Multiple Choice

Evergreen Company has two support departments (S1 and S2) and two producing departments (P1 and P2) . Department S1 costs are allocated on the basis of number of employees, and Department S2 costs are allocated on the basis of space occupied expressed in square feet.
Data on direct department costs, number of employees, and space occupied are as follows:
If Evergreen uses the direct method, the ratio representing the portion of Department S2 allocated to P1 is

• A) 1,500/5,000.
• B) 1,500/4,000.
• C) 1,500/5,500.
• D) 1,500/2,000.

---

Definitions:

Security Agreements

Legal contracts that create a lien on assets, providing a lender with a security interest in the assets of the borrower.

Collateral

Assets pledged as security for repayment of a loan, subject to seizure on default.

Repossess Collateral

The act of taking back goods or property by a creditor or seller from the borrower or buyer due to defaults on payment terms.

Self-Help

A legal way to enforce a right or resolve a dispute by taking action oneself, within legal boundaries, rather than relying on law enforcement or judicial proceedings.