Your Companey  has two service departments – Personnel and Maintenance.  The Maintenance Department's costs of $160,000 are allocated on the basis of standard hours used.  The Personnel Department's costs of $40,000 are allocated based on the number of employees.  The costs of the operating Departments A and B are $80,000 and $120,000, respectively. Data on standard service hours and number of employees are as follows: Standard Service         Maintenance Dept.      Personnel Dept.           Production Depts.                                                                                                                 A              B Hours used                                 -                                400                  480            320 Number of Employees              20                                -                        80            240    What is the cost of the Maintenance Department allocated to Department B using the direct method? What is the cost of the Maintenance Department allocated to Personnel Department using the direct method? What is the cost of the Maintenance Department allocated to Personnel Department using the step-down method? What is the cost of the Personnel Department allocated to Department A using the step-down method?

Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
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Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...
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Your Companey  has two service departments – Personnel and Maintenance.  The Maintenance Department's costs of $160,000 are allocated on the basis of standard hours used.  The Personnel Department's costs of $40,000 are allocated based on the number of employees.  The costs of the operating Departments A and B are $80,000 and $120,000, respectively.

Data on standard service hours and number of employees are as follows:

Standard Service         Maintenance Dept.      Personnel Dept.           Production Depts.

                                                                                                                A              B

Hours used                                 -                                400                  480            320

Number of Employees              20                                -                        80            240

 

  1.  What is the cost of the Maintenance Department allocated to Department B using the direct method?
  2. What is the cost of the Maintenance Department allocated to Personnel Department using the direct method?

  3. What is the cost of the Maintenance Department allocated to Personnel Department using the step-down method?

  4. What is the cost of the Personnel Department allocated to Department A using the step-down method?

     

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