The Merchant Manufacturing Co. has two servicing departments - purchasing and ma
ID: 2375822 • Letter: T
Question
The Merchant Manufacturing Co. has two servicing departments - purchasing and maintenance - and two production departments - fabrication and assembly. The distribution of each service department's efforts to the other departments is shown below:
FROM TO
Purchasing Maintenance Fabrication Assembly
Purchasing 0% 60% 10% 30%
Maintenance 20% 0% 30% 50%
The direct operating costs of the departments (including both variable and fixed costs) were as follows:
Purchasing: 96,000
Maintenance: 18,000
Fabrication: 72,000
Assembl: 48,000
The total cost accumulated in the fabrication department using the step method is (assuming the purchasing department goes first; calculate all ratios and percentages to 4 decimal places , for example 33.3333%, and round all dollar amounts to the nearest whole dollar)
A.104,500
B.109.950
C.124,050
D.130,750
E.136,500
Explanation / Answer
B.109.950