Lincoln Corporation
Lincoln Corporation distributes its service department overhead costs directly to producing departments without allocation to the other service departments.Information for January is presented here.
$\text {\underline{ Mantenance} }$ $\text {\underline{ Utilities} }$
$\begin{array}{lll}
\text { Overhead costsincurred } & \$ 18,700 & \$ 9,000 \
\text { Service provided to: } & \
\text { Maintenance Dept. } && 10 \% \
\text { Utilities Dept. } & 20 \% &\
\text { Producing Dept. A } & 40 \% &30 \%\
\text { Producing Dept. B } & 40 \% & 60 \%
\end{array}$

Refer to Lincoln Corporation.Assume that Lincoln Corporation distributes service department overhead costs based on the algebraic method.What would be the formula to determine the total maintenance costs?

Question

Lincoln Corporation
Lincoln Corporation distributes its service department overhead costs directly to producing departments without allocation to the other service departments.Information for January is presented here.
                                                    $\text {\underline{ Mantenance} }$ $\text {\underline{ Utilities} }$
$\begin{array}{lll}
\text { Overhead costsincurred } & \$ 18,700 & \$ 9,000 \
\text { Service provided to: } & \
\text { Maintenance Dept. }  && 10 \% \
\text { Utilities Dept. } & 20 \% &\
\text { Producing Dept. A } & 40 \% &30 \%\
\text { Producing Dept. B } & 40 \% & 60 \%
\end{array}$

Refer to Lincoln Corporation.Assume that Lincoln Corporation distributes service department overhead costs based on the algebraic method.What would be the formula to determine the total maintenance costs?

Quizplus · Accepted Answer

Based on the algebraic method, the formula to determine the total maintenance costs would be:
M = Maintenance Department Costs Incurred + (Percentage of Maintenance Service Provided to Utilities Department × Utilities Department Costs Incurred) 
= $18,700 + (.10 × $9,000) 
= $18,700 + $900 
= $19,600 
Therefore, the correct choice is A, as it represents the formula for total maintenance costs incurred.

Lincoln Corporation Lincoln Corporation Distributes Its Service Department Overhead Costs Mantenance‾ \text {\underline{ Mantenance} } Mantenance​

Lincoln Corporation
Lincoln Corporation Distributes Its Service Department Overhead Costs $\text {\underline{ Mantenance} }$