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:
Required:
Use the direct method to allocate these service department costs to the operating departments.
The following data appear in the company records for the current period:
| Maintenance | Personnel | Printing | Developing | |||||||||
| Machine-hours | — | 1,700 | 1,700 | 5,100 | ||||||||
| Labor-hours | 500 | — | 500 | 3,500 | ||||||||
| Department direct costs | $ | 3,000 | $ | 13,000 | $ | 14,100 | $ | 11,200 | ||||
Use the direct method to allocate these service department costs to the operating departments.
