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 costs of $320,000 are allocated on the basis of machine hours. The Accounting Department's costs of $140,000 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $320,000 and $520,000, respectively.

   
What is the Accounting Department's cost allocated to Department B using the direct method?

Explanation / Answer

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

[$140000/(28+24)]*24=$64615.3846

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