C is corrent because under the direct method, service department costs are allocated directly to the producing departments based on relative services provided, and services to other service departments are ignored. Therefore, even though 10% of the utilities department services were used by maintenance, the 10% is ignored and no utilities cost is allocated to maintenance. The $9,000 of utilities cost is allocated to departments A and B based on relative service performed: 30/90 to A and 60/90 to B, where 90 = 30 + 60.
Department B would be allocated $6,000 of utilities cost.
A: (30/90) ($9,000) = $3,000
B: (60/90) ($9,000) = $6,000
A is incorrect because utility costs are only allocated to deparments A & B.
B is incorrect because utility costs are only allocated to departments A & B.
D is incorrect because utility costs are only allocated to departments A & B.
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