Perry Company has two service departments, Maintenance and Human Resources, and two production departments, Machining and Assembly. The following data have been estimated for next year’s operations:
Department Direct Charges Square Footage Labor Hours
Human Resources 135000
Maintainance 100000 5000
Machinning 275000 2000 20000
Assembly 225000 3000 25000
The Human Resources Department services all departments.
Requirements:
(1) Distribute the service department costs using the direct distribution method. Human Resources uses Labor Hours and Maintenance uses Square Footage.
(2) Distribute the service department costs using the sequential distribution method with the department servicing the greatest number of other departments being distributed first.