Hotchkiss Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments,

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Question:

Hotchkiss Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $90,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $9,000 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $36,000 and $60,000, respectively.

Data on standard service hours and number of employees are as follows:

	Maint. Dept.	Person. Dept.	Dept. P1	Dept. P2
Standard service hours used	400	200	1,200	600
Number of employees	20	40	180	180
Direct labor hours	200	200	1,000	1,000

What are the total overhead costs associated with P2 after allocating the Maintenance and Personnel Departments using the direct method?

a.$94,500

b.$48,000

c.$90,000

d.$99,000

Diane's Pottery Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $30,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $9,000 and $15,000, respectively.

Data on standard service hours and number of employees are as follows:

	Maint.	Person.	Dept.	Dept.
	Dept.	Dept.	X	Y
Standard service hours used	100	75	600	300
Number of employees	50	100	150	150
Direct labor hours	125	125	500	250