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

Question

The RAH Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's cost of 300,000 are allocated on the basis of machine hours. The Accounting Department's cost of $120,000 are allocated on the basis of the number of employees within a specific department. The direct departmental cost for A and B are $300,000 and $500,000, respectively.

Maint Acctg A B
Machine Hours 4800 20 2300 200
Number of employees 2 2 8 4

a. What is the Maintenance Department's cost allocated to Department A using the direct method?
b. What is the Accounting Department's cost allocated to Department B using the direct method?
c. What is the Maintenance Department's cost allocated to Department B using the step method and assuming the Maintenance Department's costs are allocated first?

Explanation / Answer

Maintenance

Accounting

Dept

Dept

Dept A

Dept B

Total

Maintenance

Accounting

Dept

Dept

Dept A

Dept B

Total

Costs Allocation under Direct Methode:

Maintenance

Accounting

Dept

Dept

Dept A

Dept B

Total

Departments costs 300000 120000 300000 500000 1220000 Allocation: Maintenance Dept 23/25 & 2/25 -300000 276000 24000 Accounts Dept 8/12 & 4/12 -120000 80000 40000 Total Costs Allocation: 0 0 656000 564000 1220000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

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