Golden Leaves Company Has Two Support Departments, Maintenance Department (MD)

Multiple Choice

Golden Leaves 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: $$\begin{array} { l r r r r } & \text { MD } & \text { PD } & \text { P1 } & { \text { P2 } } \\\text { Standard service hours used } & 100 & 50 & 300 & 150 \\\text { Number of employees } & 10 & 20 & 90 & 90 \\\text { Direct labor hours } & 50 & 50 & 250 & 250\end{array}$$
What are the total overhead costs associated with P2 after allocating the Maintenance and Personnel Departments using the direct method?

A) $37,250
B) $27,250
C) $25,000
D) $15,000