Parker Corporation has two service departments,Cafeteria and Engineering,and two operating departments.The number of employees in each department is given below:
The costs of the Cafeteria are allocated to other departments on the basis of the number of employees in the departments.If these costs are budgeted at $69,375,the amount of Cafeteria cost allocated to Engineering under the direct method would be closest to:
A) $0
B) $3,700
C) $3,750
D) $17,344

Question

Parker Corporation has two service departments,Cafeteria and Engineering,and two operating departments.The number of employees in each department is given below:
 The costs of the Cafeteria are allocated to other departments on the basis of the number of employees in the departments.If these costs are budgeted at $69,375,the amount of Cafeteria cost allocated to Engineering under the direct method would be closest to:
A) $0 
B) $3,700 
C) $3,750 
D) $17,344

Quizplus · Accepted Answer

When the direct method is used, none of the service department costs are allocated to each other.

Parker Corporation Has Two Service Departments,Cafeteria and Engineering,and Two Operating