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			Printing			Developing
Machine-hours		—			1,700			1,700			5,100
Labor-hours		700			—			700			2,800
Department direct costs	$	2,400		$	12,400		$	14,100		$	11,000

Required:

Use the direct method to allocate these service department costs to the operating departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)

Answer 1

Allocation

	Maintenance	Personnel	Printing	Developing
Service department cost	2400	12400
Allocation of maintenance	-2400		600	1800
Allocation of personnel		-12400	2480	9920
Total Cost	0	0	3080	11720