The RAH Manufacturing Company has two service departments: Maintenance and Accou
ID: 2462521 • Letter: T
Question
The RAH Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $306,000 are allocated on the basis of machine hours. The Accounting Department's costs of $126,000 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $306,000 and $506,000, respectively.
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?
$29,401.
$279,000.
$233,000.
$325,000.
Maint Acctg A B Machine hours 492 26 2,420 260 Number of employees 8 8 14 10Explanation / Answer
Answer:
[260/(26 + 2,420 + 260)] $306,000
=(260/2706)*306000=29401
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