Question:

Refer to figure 7-6 . Using the sequential method , if the support department with the highest percentage of interdepartmental service is allocated first, the cost of the support departments allocated to Department P1 is :

a. 12,750

b. 24,000

c. 21,750

d. 20,295

Could you please show the work?

Figure 7-6 Golden Leaves Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $30,000 are allocated on the basis of standard service used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments Pl and P2 are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows: Standard service hours used Number of employees MD 100 10 PD 50 20 Pl 300 90 P2 150 90 50 50 250 250 Direct labor hours