Dean Corporation has two service departments, Power and Maintenance, and two production departments, Painting and Polishing. The following data have been estimated for next year's operations:
Department: Direct Charges Kilowatt Hours Used Square Footage
Power $450,000 20,000 10,000
Maintenance 120,000 50,000 5,000
Painting 235,000 100,000 30,000
Polishing 265,000 150,000 20,000
Requirements:
(1)
a) For which service department would you use kilowatt hours to allocate service costs.
b) For which service department would you use square footage to allocate service costs.
(2) Distribute the service department costs using the direct distribution method.
(3) Prepare the journal entries to distribute the costs of the service departments to the production departments given the results of your calculations.