Answer: a. $600 Maintenance costs to Printing
$1,800 Maintenance costs to Developing
b. $2,480 Personnel costs to Printing
$9,920 Personnel costs to Developing
Explanation:
The Direct method as mentioned, allocates the service department costs to the Operating Departments.
Overheads from the Service Departments will not be allocated to the each other. In other words, Maintenance costs will not be allocated to Personnel and Vice Versa.
a. Allocating Maintenance Costs
Maintenance Cost is $2,400 which is to be allocated on the basis is machine hours.
Printing had 1,700 in Machine hours.
Their allocation is,
= 1,700 / ( total machine hours in the two operating Department) * $2,400
= 1,700 / (1,700 + 5,100) * 2,400
= 1,700 / 6,800 * 2,400
= <em>$600 Maintenance costs to Printing </em>
Developing had 5,100 machine hours
= 5,100 / 6,800 * 2,400
= <em>$1,800 Maintenance costs to Developing</em>
b. Allocating Personnel Costs
Maintenance Cost is $12,400 which is to be allocated on the basis is labour hours.
Printing had 700 in labor hours.
Their allocation is,
= 700 / ( total machine hours in the two operating Department) * $12,400
= 700 / ( 700 + 2,800) * 12,400
= 700 / 3,500 * 12,400
= <em>$2,480 Personnel costs to Printing</em>.
Developing had 2,800 machine hours.
= 2,800 / 3,500 * 12,400
= <em>$9,920 Personnel costs to Developing</em>
