Molten Works Ltd provides the following information about departmental consumption of allocation bases for its 3 support and 2 operating departments. $$\begin{array} { | l | l | c | c | c | c | }
\hline &{ \text { Support Departments } } &&& { \text { Operating Departments } } \
\hline & \text { Personnel } & \text { Cafeteria } & \text { Maintenance } & \text { Machining } & \text { Assernbly } \
\hline \text { Personnel } & & 10 \% & 10 \% & 50 \% & 30 \% \
\hline \text { Cafeteria } & 10 \% & & 10 \% & 40 \% & 40 \% \
\hline \text { Maintenance } & 10 \% & 20 \% & & 50 \% & 20 \% \
\hline
\end{array}$$ For the direct method, what proportion of the Personnel's costs will be allocated to the Machining Department?
A) 62.5%
B) 10%
C) 42.9%
D) 37.5%

Question

Molten Works Ltd provides the following information about departmental consumption of allocation bases for its 3 support and 2 operating departments. $$\begin{array} { | l | l | c | c | c | c | } 
\hline &{ \text { Support Departments } } &&& { \text { Operating Departments } } \
\hline & \text { Personnel } & \text { Cafeteria } & \text { Maintenance } & \text { Machining } & \text { Assernbly } \
\hline \text { Personnel } & & 10 \% & 10 \% & 50 \% & 30 \% \
\hline \text { Cafeteria } & 10 \% & & 10 \% & 40 \% & 40 \% \
\hline \text { Maintenance } & 10 \% & 20 \% & & 50 \% & 20 \% \
\hline
\end{array}$$ For the direct method, what proportion of the Personnel's costs will be allocated to the Machining Department?
A) 62.5%
B) 10%
C) 42.9%
D) 37.5%

Quizplus · Accepted Answer

The direct method allocates support department costs directly to operating departments without allocating costs between support departments. For the Personnel department, the allocation to Machining is 50% of its total, as indicated in the table. The other percentages (10% to Cafeteria, 10% to Maintenance, and 30% to Assembly) are not relevant for this calculation.

Molten Works Ltd Provides the Following Information About Departmental Consumption