Minor Co has a job order cost system and applies
Minor Co. has a job order cost system and applies overhead based on departmental rates. Service Department 1 has total budgeted costs of $168,000 for next year. Service Department 2 has total budgeted costs of $280,000 for next year. Minor allocates service department costs solely to the producing departments.
Service Department 1 cost is allocated to producing departments on the basis of machine hours. Service Department 2 cost is allocated to producing departments on the basis of direct labor hours. Producing Department 1 has budgeted 8,000 machine hours and 12,000 direct labor hours. Producing Department 2 has budgeted 2,000 machine hours and 12,000 direct labor hours. What is the total cost allocation from the two service departments to Producing Department 1?
a. $173,600
b. $140,000
c. $134,400
d. $274,400
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