University Printers has two service departments (Maintenance and Personnel) and

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 Machine-hours Labor-hours Department direct costs 5,400 2,600 4,000 $14,000 $15,900 $12,600 1,800 650 1,800 650 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.) Maintenance Personnel Printing Developing Service department costs Personnel allocation Total costs allocatec

Explanation / Answer

1000

1800/(1800+5400)*4000

3000

5400/(1800+5400)*4000

2800

650/(650+2600)*14000

11200

2600/(650+2600)*14000

Maintenance personnel printing developing Service department costs 4000 14000 Maintenance allocation (4000)

1000

1800/(1800+5400)*4000

3000

5400/(1800+5400)*4000

Personnel allocation (14000)

2800

650/(650+2600)*14000

11200

2600/(650+2600)*14000

Total cost allocated 0 0 3800 14200

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