Exercise 11-28 Cost Allocation: Direct Method (LO 11-2) University Printers has

Question

Exercise 11-28 Cost Allocation: Direct Method (LO 11-2) University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each The following data appear in the company records for the current period Machine-hours Labor-hours Department direct costs Maintenance Personnel Printing Developing 3,000 2,000 $10,000 1,000 500 5,000 1,000 500 $12,000$15,000 Required Use the direct method to allocate these service department costs to the operating departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Mainten ance Personnel Printing Developing Service department costs Maintenance allocation Personnel allocation Total costs allocated 0

Explanation / Answer

Maintenance Personnel Printing Developing Service department costs $               5,000 $      12,000 Maintenance allocation $              -5,000 $               -   $        1,250 $        3,750 Personnel allocation $    -12,000 $        2,400 $        9,600 Total costs allocated $                      -   $               -   $        3,650 $     13,350

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