Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $170,000 are allocated based on the number of employees. The costs of operating departments A and B are $188,000 and $282,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
Production
Support DepartmentsDepartments

Using the direct method, what amount of Personnel Department costs will be allocated to Department B? (Do not round any intermediary calculations.)
A) $44,737
B) $50,000
C) $107,368
D) $120,000

Question

Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $170,000 are allocated based on the number of employees. The costs of operating departments A and B are $188,000 and $282,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
Production
Support DepartmentsDepartments

Using the direct method, what amount of Personnel Department costs will be allocated to Department B? (Do not round any intermediary calculations.)
A) $44,737 
B) $50,000 
C) $107,368 
D) $120,000

Quizplus · Accepted Answer

Personnel Department costs allocated to Department B = 600 / (250 + 600) × $170,000 = $120,000

Hanung Corp Has Two Service Departments, Maintenance and Personnel