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:

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.)

Maintenance Personnel Printing    Developing

Service Department Cost

Maintenance

Personnel

Total costs allocated

Maintenance Personnel Printing Developing Machine-hours — 1,200 1,200 3,600 Labor-hours 600 — 600 2,400 Department direct costs $ 2,400 $ 12,400 $ 14,200 $ 11,100

Explanation / Answer

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.)

Developing Maintenance Personnel Printing Service department cost 2400 12400 14200 11100 Maintenance (2400) 480 480 1440 Personnel (12880) 2576 10304 Total cost allocated 17256 22844

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