Using the direct method, Pone Hill Company allocates Janitorial Department costs based on square footage serviced.  It allocates Cafeteria Department costs based on the number of employees served.  It has the following information about its two service departments and two production departments, Cutting and Assembly:   Square Feet Number of Employees Janitorial Department 100     20        Cafeteria Department 10,000     10        Cutting Department 2,000     60        Assembly Department 8,000     20        If the Janitorial Department incurs costs of $200,000, how much of that cost is allocated to the Cutting Department? a. $160,000 b. $40,000 c. $19,800

Cornerstones of Cost Management (Cornerstones Series)
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Chapter7: Allocating Costs Of Support Departments And Joint Products
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Using the direct method, Pone Hill Company allocates Janitorial Department costs based on square footage serviced.  It allocates Cafeteria Department costs based on the number of employees served.  It has the following information about its two service departments and two production departments, Cutting and Assembly:

  Square Feet Number of
Employees
Janitorial Department 100     20       
Cafeteria Department 10,000     10       
Cutting Department 2,000     60       
Assembly Department 8,000     20       

If the Janitorial Department incurs costs of $200,000, how much of that cost is allocated to the Cutting Department?

a. $160,000
b. $40,000
c. $19,800
d. $20,000
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