Gomez Company has two service departments, Maintenance and Personnel, - 12564

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  • Posted on: Tue 17 Jul, 2012
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Request Description

Gomez Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing. Maintenance costs are allocated based on square footage while personnel costs are allocated based on number of employees. The following information has been gathered for the current year _____. 

Maintenance 

Personnel 

Mixing 

Finishing 

Direct dept. costs $126,000 $84,000 $105,000 $175,000 

Square footage 800 400 1,600 1,200 

Number of employees 8 12 24 32 

If the step-down method is used to allocate costs and the Maintenance Department is allocated first, the amount of overhead that would be allocated from Maintenance to Mixing is: 

A. $36,000 

B. $42,750 

C. $42,000 

D. $63,000 

 
Solution Description

Gomez Company has two service departments, Maintenance and Personn