Solve the below problem:
Q: 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:
Maintenance |
Personnel |
Printing |
Developing |
| Machine-hours |
|
" |
|
|
1,000 |
|
|
1,000 |
|
|
3,000 |
|
| Labor-hours |
|
500 |
|
|
" |
|
|
500 |
|
|
2,000 |
|
| Department direct costs |
$ |
15,000 |
|
$ |
36,000 |
|
$ |
45,000 |
|
$ |
30,000 |
Required:
(a) Allocate the service department costs using the step method, starting with the Maintenance Department.