The Hsu Manufacturing Company has two service departments: Maintenance and Accou

Question

The Hsu Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $641,850 are allocated on the basis of machine hours. The Accounting Department's costs of $212,400 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $390,000 and $590,000, respectively. Maint Acctg 65 Machine hours Number of employees 495 3,600 2 What is the Accounting Department's cost allocated to Department B using the direct method? O $17700 O $70,800 O $141600 o $35,400.

Explanation / Answer

B. $70,800

The Accounting Department's cost allocated to Department B using the direct method is:

= [$212,400/(8 + 4)] × 4

= $70,800

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