The Accountant for Milton, Inc

Multiple Choice

The accountant for Milton, Inc. is preparing the budgets for operating department support service costs. Maintenance costs are allocated based on square feet, and cafeteria costs are allocated based on number of employees. The following data have been collected: Support Departments Operating Departments
Maintenance Cafeteria Cutting Packaging
Direct costs $50,000 $45,000 $275,000 $300,000
Number of employees 15 10 150 250
Square metres 1,500 2,000 3,500 4,000
If the step-down method is used and maintenance is allocated first, the total cost allocated to the cutting department will be:

A) $55,757
B) $39,243
C) $20,822
D) $40,208