Question
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing)....
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 | — | 1,000 | 1,000 | 3,000 | ||||||||
| Labor-hours | 500 | — | 500 | 2,000 | ||||||||
| Department direct costs | $ | 5,000 | $ | 12,000 | $ | 15,000 | $ | 10,000 | ||||
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.)
Answers
Allocation
Maintenance Personnel Printing developing Department direct cost 5000 12000 Maintenance allocation -5000 1250 3750 Personnel allocation -12000 2400 9600 Total Cost allocation 0 0 3650 13350
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