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 2,000 Machine-hours Labor-hours Department direct costs 900 $3,600 Printing Developing 2,000 4,000 900 2,100 $14,200 $12,600 $13,600 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 Developing Service department costs Maintenance Personnel Total costs allocated

Answer 1

Answer

	Maintenance	Personnel	Printing	Developing
Service Department Costs	$3,600	$13,600	$14,200	$12,600
Maintenance Allocation (Denominator used:2000 + 2000 + 4000 = 8000)	($3,600)	$900	$900	$1,800
Personnel Allocation ( Denominator: 900 + 2100 = 3000)		($14,500)	$4,350	$10,150
Total Cost allocated	$0	$0	$19,450	$24,550