Question

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: $$ \begin{array}{|c|c|c|c|c|} \hline \text { } & \text { Maintenance}& \text { Personnel }& \text { Printing}&\text { Developing} \\ \hline \text { Machine-hours ........... } & - & 1,000 & 1,000 & 3,000 \\ \hline \text { Labor-hours } & 500 & - & 500 & 2,000 \\ \hline \text { Department direct costs.... } & \$ 15,000 & \$ 36,000 & \$ 45,000 & \$ 30,000 \\ \hline \end{array} $$ Required Use the direct method to allocate these service department costs to the operating departments.

   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:
$$
\begin{array}{|c|c|c|c|c|}
\hline \text { } & \text { Maintenance}& \text { Personnel }& \text { Printing}&\text { Developing} \\
\hline \text { Machine-hours ........... } & - & 1,000 & 1,000 & 3,000 \\
\hline \text { Labor-hours } & 500 & - & 500 & 2,000 \\
\hline \text { Department direct costs.... } & \$ 15,000 & \$ 36,000 & \$ 45,000 & \$ 30,000 \\
\hline
\end{array}
$$
Required
Use the direct method to allocate these service department costs to the operating departments.
Show more…
Fundamentals of Cost Accounting
Fundamentals of Cost Accounting
William Lanen,… 4th Edition
Chapter 11, Problem 25 ↓

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Step 1

- Total machine-hours = Machine-hours in Printing + Machine-hours in Developing = 1,000 + 3,000 = 4,000 machine-hours. - Total labor-hours = Labor-hours in Printing + Labor-hours in Developing = 500 + 2,000 = 2,500 labor-hours.  Show more…

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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: $$ \begin{array}{|c|c|c|c|c|} \hline \text { } & \text { Maintenance}& \text { Personnel }& \text { Printing}&\text { Developing} \\ \hline \text { Machine-hours ........... } & - & 1,000 & 1,000 & 3,000 \\ \hline \text { Labor-hours } & 500 & - & 500 & 2,000 \\ \hline \text { Department direct costs.... } & \$ 15,000 & \$ 36,000 & \$ 45,000 & \$ 30,000 \\ \hline \end{array} $$ Required Use the direct method to allocate these service department costs to the operating departments.
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