A. The Grey 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. Maintenance Accounting A B Machine hours 480 20 2,300 200 Number of employees 2 2 8 4 What are the total service department costs allocated to Department A using the step method if the maintenance department costs are allocated first
1 answer:
Answer:
due to the limitation of brainly text document kindly check the attached images below to see the proper and organized accounting table containing the answer to the question
Explanation:
Allocation of service costs - Accounting
Particulars Calculation Maintenance Dept A Dept B Total
Number of
employees Given 2 8 4 14
Cost to be allocated $120,000 x 2/14 $17,142.86
$120,000 x 8/14 $68,571.43
$120,000 x 4/14 $ 34,285.71$
1,20,000.00
Allocation of service costs - Maintenance
Particulars Calculation Dept A Dept B Total
Machine hours Given 2300 200 2500
Cost to be allocated $317,142x 2300/2500 $ 2,91,771.43
$317,142x 200/2500 $ 25,371.43 $ 3,17,142.86
Particulars Maintenance Accounting Department A Department B
Department cost before allocation $ 3,00,000.00 $ 1,20,000.00 $ 3,00,000.00 $ 5,00,000.00
Allocation:
Accounting Department $ 17,142.86 $ -1,20,000.00 $ 68,571.43 $ 34,285.71
Balance $ 3,17,142.86 $ - $ 3,68,571.43 $ 5,34,285.71
Maintenance Department $ -3,17,142.86 $ 2,91,771.43 $ 25,371.43
Total Costs after allocation $ - $ 6,60,342.86 $ 5,59,657.14
B. The joint cost to be allocated to product X will be in the proportion of Net realizable value at the point of split off. Further total joint costs should be reduced by the revenue from by product Z.
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