Figure 7-6 Oaks Company Has Two Support Departments, Maintenance Department

Multiple Choice

Figure 7-6 Oaks 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:

- Refer to Figure 7-6.What are the total overhead costs associated with P2 after allocating the Maintenance and Personnel Departments using the direct method?

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