Letter Corporation Has Two Service Departments (A and B) That

Multiple Choice

Letter Corporation has two service departments (A and B) that provide service to each other and to two operating departments (X and Y) . A provides 20% of its service to B, 30% of its service to X, and 50% of its service to Y. B provides 10% of its service to A, 45% of its service to X, and 45% of its service to Y. Operating costs in A are $300,000. Operating costs in B are $180,000. Cost allocations are made starting with department A. No distinction is made between variable and fixed costs.
-If service department costs are allocated using the direct method, what is the total amount of service cost that will be allocated to X?

A) $172,000
B) $180,000
C) $198,000
D) $202,500