Intermodal Moving Uses the Direct Method and Allocates Its Maintenance

Short Answer

Intermodal Moving uses the direct method and allocates its maintenance costs on the basis of repair hours and its payroll department costs on the basis of employees. Estimated costs and information on the services and production departments follows: $\begin{array}{lr}\text { Payroll } & \$ 36,000 \\\text { Maintenance } & \$ 48,000 \\\text { Packing } & 30 \text { employees, 280 repair hours } \\\text { Driving } & 10 \text { employees, 1,960 repar hours }\end{array}$ How much of the payroll and maintenance costs will be allocated to the packing department? $$\begin{array} { l c c } & \text { Payroll } & \text { Maintenance } \\\text { A. } & \$ 900 & \$ 171.43 \\\text { B. } & \$ 27,000 & \$ 6,000 \\\text { C. } & \$ 27,000 & \$ 21.43 \\\text { D. } & \$ 1,200 & \$ 6,000\end{array}$$