Quinlan, Inc

Multiple Choice

Quinlan, Inc. has two support departments (Maintenance and Personnel) and two operating departments (Tables and Chairs) . The Maintenance department provides more services to the Personnel department than the Personnel department provides to Maintenance. Once the support department costs have been allocated to the operating departments, each operating department allocates its total costs to units produced. Support Departments Operating Departments
Maintenance Personnel Tables Chairs
Direct costs $27,000 $24,000 $44,000 $21,000
Square metres 6,000 10,000 20,000 60,000
Number of employees 20 40 70 80
Units produced ---- ---- 4,000 2,000
Assume the step-down method is used. The amount of cost allocated from Personnel to Maintenance is:

A) $1,500
B) $1,687.50
C) $9,000
D) $0