San Juan Minerals (SJM) has two service departments and two operating departments. Operating data for these departments for last year are as follows: Service DepartmentsOperating Departments MaintenanceCafeteriaMiningProcessingDepartmental costs$48,000$45,000$70,000$130,000Machine hours 2,000 1,000 11,000 9,000Number of employees 40 30 400 360 Costs of the Maintenance Department are allocated on the basis of machine hours. Cafeteria costs are allocated on the basis of number of employees. SJM does not distinguish between variable and fixed overhead costs. Assuming that SJM allocates service department costs using the direct method, the total cost allocated from Maintenance to Processing would be closest to:
A. $26,400
B. $21,600
C. $18,783
D. $20,571
Answer: B
Business
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