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Tampa Instrument Company manufactures gauges for construction machinery. The company has two production departments: Machining and Assembly. There are three service departments: Maintenance, Human Resources (HR), and Computer Aided Design (CAD). The usage of these service departments’ output during the year just completed is as follows:

Provision of Service Output (in hours of service)
		Provider of Service
User of Service	HR				Maintenance				CAD
HR		—				—				—
Maintenance		1,000				—				—
CAD		1,000				1,000				—
Machining		3,000				2,000				4,000
Assembly		5,000				3,000				2,000
Total		10,000				6,000				6,000

The budgeted costs in Tampa Instrument Company’s service departments during the year are as follows:

	HR				Maintenance				CAD
Variable	$	65,000			$	80,000			$	65,000
Fixed		240,000				228,000				310,000
Total	$	305,000			$	308,000			$	375,000

When Tampa Instrument Company established its service departments, the following long-run needs were anticipated.

Long-Run Service Needs (in hours of service)
		Provider of Service
User of Service	HR				Maintenance				CAD
HR		—				—				—
Maintenance		500				—				—
CAD		1,500				400				—
Machining		3,000				4,000				4,500
Assembly		5,000				1,600				1,500
Total		10,000				6,000				6,000

Required:

Use dual cost allocation in conjunction with each of the following methods to allocate Tampa Instrument Company’s service department costs: (1) direct method and (2) step-down method.

1. 1. Direct method combined with dual allocation.
2. a. Variable costs
3. b. Fixed costs
4. c. Total costs allocated

Direct method combined with dual allocation for variable costs. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

	Production Departments Provider of Service Machining Assembly HR Maintenance CAD Total variable cost

Direct method combined with dual allocation for fixed costs. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

	Production Departments Provider of Service Machining Assembly HR Maintenance CAD Total fixed cost

Direct method combined with dual allocation for total costs allocated. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

	Machining Assembly Variable costs Fixed costs Total costs

Answer 1

Direct Method:

1) Direct Method: a) Vaiable Costs Variable Costs |Machining Assembly Maintenance CAD HR $65,000 $80,000 $65,000 Allocation of HR variable costs (S65,000*3,000/8,000); |(S65,000*5,000/8,000) (8,000 3,000 5,000) Allocation of Maintenance variable costs (S80,000*2,000/5,000) |(S80,000*3,000/5,000) (5,000 =2,000 3,000) $24,375 $40,625 (S65,000) $32,000 $48,000 (S80,000) Allocation of CAD variable costs (S65,000*4,000/6,000); |(S65,000*2,000/6,000) (6,000 4,000 2,000) Allocation of Total Variable Costs $43,333 S21,667 $99,708S110,292 ($65,000) $0 b) Fixed Costs: Fixed Costs Allocation of HR variable costs (S240,000*3,000/8,000) |(S240,000*5,000/8,000) (8,000 3.000 5,000) Allocation of Maintenance variable costs (S228,000*2,000/5,000) |(S228.000*3,000/5,000) (5,000 2,000 3,000) Maintenance CAD $228,000 $310,000 |Machining Assembly HR $240,000 S90,000 S150,000 ($240,000.00) $91,200 S136,800 ($228,000) Allocation of CAD variable costs (S310,000*4,000/6,000); (S310,000*2,000/6,000) (6,000 2,000 6,000) |Allocation of Total Fixed Costs (S310,000) S206,667 |S103,333 SO S387,867 S390,133 $0 $0

Machining Assembly Maintenance CAD c) Total Costs Total Costs HR $99,708 S110,292 S0 S387,867 $390,133 $0$487,575 $500,425 Allocation of Total Variable Costs $0 $0 Allocation of Total Fixed Costs S0 S0 |Allocation of Total Costs $0 $0

Only direct method is answered as fields are given for direct method only.