6. A Company has two service departments, Facilities and Human Resources, as well as two line departments, Machining and Assembly. Facilities Department costs are allocated based on square footage and Human Resources Department costs are allocated based on number of employees. The following data was available: Facilities Human Res. Machining $210,000 $180,000 $76,000 2,000 4,000 20 Direct costs Square footage Number of employees Direct labor hours 1,000 30 60 8,000 Assembly $85,000 6,000 100 6,000 a) Use the direct method to allocate service department costs to line departments b) Use the step-down method to allocate service department costs to line departments. Start with facilities.

6. A Company has two service departments, Facilities and Human Resources, as well as two line departments, Machining and Assembly. Facilities Department costs are allocated based on square footage and Human Resources Department costs are allocated based on number of employees. The following data was available: Facilities Human Res. Machining $210,000 $180,000 $76,000 2,000 4,000 20 Direct costs Square footage Number of employees Direct labor hours 1,000 30 60 8,000 Assembly $85,000 6,000 100 6,000 a) Use the direct method to allocate service department costs to line departments b) Use the step-down method to allocate service department costs to line departments. Start with facilities.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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