Question

Using the direct method, Thomas Company allocates Maintenance Department costs based on square footage serviced, and it services the Cutting and Assembly departments. It allocates Cafeteria Department costs based on the number of employees served in the Cutting and Assembly departments. It has the following information about its two service departments and two production departments, Cutting and Assembly: Square Feet Number of Employees Maintenance Department 500 20 Cafeteria Department 3,000 10 Cutting Department 1,000 60 Assembly Department 9,000 20 What is the percentage (proportional) usage of the Maintenance Department by the Cutting Department? a.28% b.10% c.25% d.7%

Answer 1

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Thomas Company allocates Maintenance Department costs based on square footage serviced.

Square feet:

Maintenance= 500

Cafeteria= 3,000

Cutting= 1,000

Assembly= 9,000

Total= 13,500

Proportional usage= cutting/total square feet= 1,000/13,500= 0.074= 7%