Question: Penski Moving uses the direct method and allocates its maintenance costs on the basis of repair hours and its payroll department costs on the basis

Penski Moving uses the direct method and allocates its maintenance costs on the basis of repair hours and its payroll department costs on the basis of employees. Estimated costs and information on the services and production departments follows:

Payroll $36,000

Maintenance $48,000

Packing 30 employees, 280 repair hours

Driving 10 employees, 1,960 repair hours

How much of the payroll and maintenance costs will be allocated to the packing department?

Payroll Maintenance

A. $900 $171.43

B. $27,000 $6,000

C. $27,000 $21.43

D. $1,200 $6,000

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