Question

the Hsu Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $300,000 are allocated on the basis of machine hours. The Accounting Department's costs of $120,000 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $300,000 and $500,000, respectively. Maint Acctg A B Machine hours 480 20 2,300 200 Number of employees 2 2 8 4What is the Accounting Department's cost allocated to Department B using the direct method

Answer 1

Answer:

$34,286

Explanation:

Step 1

Total number of employees :

Maintenance                  2

Department A                8

Department B                4

Total                              14

Step 2

Allocation to Department B :

Department B = 4 / 14 x  $120,000

                       = $34,286

Conclusion :

Accounting Department's cost allocated to Department B using the direct method is  $34,286