Exercise 11-30 Cost Allocation: Step Method (LO 11-3) University Printers has tw

Question

Exercise 11-30 Cost Allocation: Step Method (LO 11-3) 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: Maintenance Personnel Printing Developing Machine-hours — 1,400 1,400 4,200 Labor-hours 900 — 900 3,600 Department direct costs $ 6,000 $ 16,000 $ 17,500 $ 14,700 Required: Allocate the service department costs using the step method, starting with the Maintenance Department. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)

Explanation / Answer

Maintenance Personnel Printing Developing Service departments cost 6000 16000 0 0 Maintenance -6000 1200 1200 3600 Personnel 0 -17200 3440 13760 Total costs allocated 0 0 4640 17360

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