The Maintenance Department fixes machinery in a factory. The Janitorial Departme

Question

The Maintenance Department fixes machinery in a factory. The Janitorial Department cleans the factory. The Assembly Department puts together the products made in the factory. The Painting Department paints the products made in the factory If the Maintenance Department performs almost no work on behalf of the Janitorial Department, and the Janitorial Department performs almost no worlk on behalf of the Maintenance Department, then which method would you recommend that the company use to allocate support department costs to the producing departments? O A Direct Method O B Seqntial Method O C Reciprocal Method O D none of the above

Explanation / Answer

The right answer is A. Direct Method

Direct method allocates each service department's total costs directly to the production departments' overhead accounts. It does not consider any service rendered by one service department to another. Here Maintenance Department does no work on behalf of Janitorial and vice -versa.

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