Oaks Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $30,000 are allocated on the basis of standard service used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $9,000 and $15,000, respectively.
Data on standard service hours and number of employees are as follows:
$\begin{array}{lrrr}
&\text { MD}&\text { PD}&\text { P1}&\text { P2}\
\text { Standard service hours used } & 100 & 50 & 300 &150\
\text { Number of employees } & 10 & 20 & 90&90\\
\text { Direst lahour houre }&50&50&250&250
\end{array}$

-Refer to the figure.What is the combined total department costs for the producing departments after allocation of the support departments?

Question

Oaks Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $30,000 are allocated on the basis of standard service used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $9,000 and $15,000, respectively.
Data on standard service hours and number of employees are as follows:
$\begin{array}{lrrr}
&\text { MD}&\text { PD}&\text { P1}&\text { P2}\
\text { Standard service hours used } & 100 & 50 & 300 &150\
\text { Number of employees } & 10 & 20 & 90&90\\
\text { Direst lahour houre }&50&50&250&250
\end{array}$

-Refer to the figure.What is the combined total department costs for the producing departments after allocation of the support departments?

Quizplus · Accepted Answer

The combined total department costs for the producing departments after allocation of the support departments is calculated by first allocating the costs of the Maintenance Department (MD) and Personnel Department (PD) based on the given bases (standard service hours and number of employees, respectively), and then adding these allocated costs to the direct costs of Departments P1 and P2.1. Allocation of Maintenance Department (MD) costs ($30,000):- Total standard service hours = 100 (MD) + 50 (PD) + 300 (P1) + 150 (P2) = 600 hours- Allocation to P1: (300/600) * $30,000 = $15,000- Allocation to P2: (150/600) * $30,000 = $7,5002. Allocation of Personnel Department (PD) costs ($4,500):- Total number of employees = 10 (MD) + 20 (PD) + 90 (P1) + 90 (P2) = 210 employees- Allocation to P1: (90/210) * $4,500 = $1,928.57 (approx.)- Allocation to P2: (90/210) * $4,500 = $1,928.57 (approx.)3. Combined total department costs for P1 and P2:- P1: Direct costs ($9,000) + MD allocation ($15,000) + PD allocation ($1,928.57) = $25,928.57 (approx.)- P2: Direct costs ($15,000) + MD allocation ($7,500) + PD allocation ($1,928.57) = $24,428.57 (approx.)- Combined total for P1 and P2 = $25,928.57 + $24,428.57 = $50,357.14 (approx.)However, since none of the provided options exactly match the calculated total, and considering the possibility of rounding differences or a mistake in the calculation, the closest and most logical option based on the provided data and methodology would be D) $58,500, assuming there might have been an error in the calculation or interpretation of the options.

Oaks Company Has Two Support Departments, Maintenance Department (MD) and Personnel