(Appendix 4B)Suppose Maintenance Department costs are allocated on the basis of labour hours.What would be the amount of cost allocated to Milling from Maintenance under the direct method?
A) $5,250.
B) $5,600.
C) $5,700.
D) $6,720.

Question

Quizplus · Accepted Answer

The direct method allocates service department costs directly to production departments based on the allocation base. If Maintenance costs are allocated based on labor hours, the amount allocated to Milling would be calculated using the proportion of labor hours used by Milling relative to total labor hours.

(Appendix 4B)Suppose Maintenance Department Costs Are Allocated on the Basis