bagley corporation has two service departments and two operating departments. the space occupied by each…

bagley corporation has two service departments and two operating departments. the space occupied by each department can be seen in the chart below. custodial services 1,000 square feet general administration 3,000 square feet operating department a 8,000 square feet operating department b 8,000 square feet total 20,000 square feet the fixed costs of custodial services are allocated on the basis of square feet. if these costs are budgeted at $38,000, what would be the amount of cost allocated to general administration under the direct method? a) $5,700 b) $0 c) $6,000 d) $7,125

bagley corporation has two service departments and two operating departments. the space occupied by each department can be seen in the chart below. custodial services 1,000 square feet general administration 3,000 square feet operating department a 8,000 square feet operating department b 8,000 square feet total 20,000 square feet the fixed costs of custodial services are allocated on the basis of square feet. if these costs are budgeted at $38,000, what would be the amount of cost allocated to general administration under the direct method? a) $5,700 b) $0 c) $6,000 d) $7,125

Answer

Explanation:

Step1: Understand the direct method

The direct method allocates service department costs only to operating departments. Service departments do not allocate costs to other service departments.

Step2: Analyze the allocation

Since General Administration is a service department, under the direct method, no cost from Custodial Services (another service department) is allocated to it.

Answer:

B. $0