X Company has two production departments, Machining and Finishing. It has two se

Question

X Company has two production departments, Machining and Finishing. It has two service departments, Maintenance and Technology. The following table shows the number of hours of service provided by the service department to other departments.

The Technology Department has costs of $720,000. The Maintenance Department has costs of $108,000.

Assume X Company uses the direct method of cost allocation, compute the amount of the Maintenance Department's cost that allocated to the Finishing Department.

Using Department Service Dept Maintenance Technology Machining Finishing Maintenance 4,000 4,000 32,000 Technology 2,000 14,000 2,000

Explanation / Answer

Direct cost allocation method :

Maintenance cost allocated to finishing department = 108000/36000*32000 = $96000

So the amount of the Maintenance Department's cost that allocated to the Finishing Department is $96000

Related Questions

Navigate

• Browse (All)
• Browse X
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.