Question

University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. The following data appear in the company records for the current period: Maintenance Personnel 1,500 Machine-hours Labor-hours Department direct costs 500 $4,800 Printing 1,500 500 $16,000 Developing 4,500 3,500 $13,300 $14,800 Required: Allocate the service department costs using the step method, starting with the Maintenance Department. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Maintenance Personnel Printing 0 Developing 0 Service department costs Maintenance Personnel Total costs allocated 0 $ 0 $ 0 $ 0 $ 0

Answer 1

Allocation:

	Maintenance	Personnel	Printing	Developing
Service department costs	4800	14800
Maintenance	-4800	4800*15/75 = 960	960	2880
Personnel		-15760	15760*5/40 = 1970	13790
Total Costs allocated	0	0	2930	16670

Answer 2

personnel4800*1500/7500=960

4,500+1500+1,500= 7500

printing 15,760*500/4000= 1,970

3500+500=4000 

4,800-960-960= 2,880

15,760-1,970= 13,790