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 1, 200 Printing 1,600 400 Developing 3, 200 2,000 $10,500 Machine-hours Labor-hours 600 Department direct costs $2,100 $12,000 $13,600 Required: Allocate the service department costs using the step method, starting with the Maintenance Department. (Negative amounts shou be indicated by a minus sign. Do not round intermediate calculations.) Maintenance Personnel Printing Developing Service department costs Maintenance Personnel Total costs allocated 2$ 24 2$
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 1, 200 Printing 1,600 400 Developing 3, 200 2,000 $10,500 Machine-hours Labor-hours 600 Department direct costs $2,100 $12,000 $13,600 Required: Allocate the service department costs using the step method, starting with the Maintenance Department. (Negative amounts shou be indicated by a minus sign. Do not round intermediate calculations.) Maintenance Personnel Printing Developing Service department costs Maintenance Personnel Total costs allocated 2$ 24 2$
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
Machine-hours
Labor-hours
Department direct costs
Personnel
1,200
Printing
1,600
400
Deve loping
3,200
2,000
$10,500
600
$2,100
$12,000
$13,600
Required:
Allocate the service department costs using the step method, starting with the Maintenance Department. (Negative amounts should
be indicated by a minus sign. Do not round intermediate calculations.)
Maintenance
Personnel
Printing
Developing
Service department costs
Maintenance
Personnel
斯
0.
2.
0.
Total costs allocated
%24
Expert Solution
Step 1Basic Information
The question is related to the Allocation of services department overheads to operating department by using step method. This method allocates service costs to the operating departments and other service departments in a sequential process. The sequence of allocation generally starts with the service department that has incurred the greatest costs.
The details are given as under
Service Departments
1.Maintainance Direct Cost = $2100 alloacted on the basis of Machine hours
2. Personnel Direct Cost = $12000 allocated on the basis of labor hours.
Operating Departments
1.Printing Direct Cost = $13600
2. Developing Direct Cost = $10500
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