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Ahat [919]
2 years ago
11

PM Industries has two service departments (Administration and Maintenance) and two operating departments. Departmental costs bef

ore allocations are $950,000 for Administration and $1,650,000 for Maintenance. Maintenance costs are allocated on the basis of the number of LPM employees. Administration has 450 employees; Maintenance has 750 employees; Operating Department 1 has 1,350 employees and Operating Department 2 has 1,200 employees. Using the step-down method, how much of the cost from the Maintenance Department will be allocated to Administration
Business
1 answer:
Nutka1998 [239]2 years ago
6 0

Answer:

The answer is " 873,529.412"

Explanation:

Following are the equation which the administration would be responsible for the costs of the maintenance departments:

\to 1,650,000 \times  \frac{1,350}{(1,350+1,200)}\\\\\to 1,650,000 \times  \frac{1,350}{2,550}\\\\\to 1,650,000 \times  \frac{135}{255}\\\\\to 1,650,000 \times  \frac{27}{51}\\\\\to 1,650,000 \times  \frac{9}{17}\\\\\to \frac{14,850,000}{17}\\\\\to 873,529.412

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