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Quantum currently allocates their repair and utility dollars to their assembly, fabricating, and finishing department using t

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Answer #1
Direct method of allocation to production departments:
   Repair Utilities Assembly Fabricating finishing
Costs $8,000,000 $10,000,000 $4,000,000 $3,500,000 $4,500,000
Repair cost allocation
(6000:10000:9000)
-$8,000,000 $1,920,000 $3,200,000 $2,880,000
Utilities cost allocation
(25000:30000:45000)
   -$10,000,000 $2,500,000 $3,000,000 $4,500,000
Total cost $0 $0 $8,420,000 $9,700,000 $11,880,000
b) Allocation to the production using the step method :
      Repair Utilities Assembly Fabricating finishing
Costs $8,000,000 $10,000,000 $4,000,000 $3,500,000 $4,500,000
Repair cost allocation
(15:6:10:9)
-$8,000,000 $3,000,000 $1,200,000 $2,000,000 $1,800,000
Utilities cost allocation
(7:25:30:45)
   -$13,000,000 $3,250,000 $3,900,000 $5,850,000
Total cost $0 $0 $8,450,000 $9,400,000 $12,150,000

c) Explanation for difference.

In Direct Method , Cost of Repair and utilities allocated on Assembly , Fabricating and Finishing deparement allocated direclty on the basis of labour hour and square footage.

However , in step down method first Allocate Repair cost on Utiliity , along with production Department and then allocate utility cost on Repair , Production department.

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