he RAH Manufacturing Company has two service departments: Maintenance and Accoun
ID: 2462515 • Letter: H
Question
he RAH Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $312,000 are allocated on the basis of machine hours. The Accounting Department's costs of $132,000 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $312,000 and $512,000, respectively. Maint Acctg A B Machine hours 504 32 2,540 320 Number of employees 14 14 20 16 What is the cost of the Accounting Department's cost allocated to Department A using the step method and assuming the Maintenance Department's costs are allocated first? $78,741. $77,636. $75,251. $66,015.
Explanation / Answer
Cost of maintenance department allocated to accounting department = ($312,000 * 32) / (32+ 2540 +320) = $9,984,000/2,892 = $3,452.28
Total accounting cost = $132,000 + $3,452.28 = $135,452.28
Cost of accounting department allocated to department A = ($135,452.28 * 20) / (20+16) = $75,251.27
Hence, answer is $75,251.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.