Pederson Company Has Two Service Departments (Cafeteria and Human Resources)

Multiple Choice

Pederson Company has two service departments (Cafeteria and Human Resources) and two production departments (Machining and Assembly) . The number of employees in each department follows. $$\begin{array} { l r } \text { Cafeteria } & 40 \\\text { Human Resources } & 60 \\\text { Machining } & 200 \\\text { Assembly } & 300\end{array}$$ Pederson uses the direct method of cost allocation and allocates cost on the basis of employees. If Human Resources cost amounts to $1,800,000, how much of the department's cost would be allocated to Assembly?

A) $900,000.
B) $720,000.
C) $1,080,000.
D) $1,200,000.
E) None of the other answers are correct.