Newton Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of £120,000 are allocated on the basis of standard service used. The Personnel Department costs of £18,000 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are £36,000 and £60,000, respectively. Data on standard service hours and number of employees are as follows:
Using the direct method, the cost of the Maintenance Department allocated to Department P1 is

A) £80,000.
B) £40,000.
C) £60,000.
D) £120,000.

Question

Newton Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of £120,000 are allocated on the basis of standard service used. The Personnel Department costs of £18,000 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are £36,000 and £60,000, respectively. Data on standard service hours and number of employees are as follows:
Using the direct method, the cost of the Maintenance Department allocated to Department P1 is

A) £80,000. 
B) £40,000. 
C) £60,000. 
D) £120,000.

Quizplus · Accepted Answer

The Answer of Newton Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of £120,000 are allocated on the basis of standard service used. The Personnel Department costs of £18,000 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are £36,000 and £60,000, respectively. Data on standard service hours and number of employees are as follows:
Using the direct method, the cost of the Maintenance Department allocated to Department P1 is

A) £80,000. 
B) £40,000. 
C) £60,000. 
D) £120,000.

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