The following information is available for Horizon Company:
Service Departments Production Departments
A B 1 2
Department costs $4,000 $2,000 $9,000 $18,000
Total labor hours 1,000 2,500 4,500 3,000
Square footage 1,000 6,000 8,000 2,000
Assume that both service departments provide services to each other. Costs for service department A are allocated based on square footage, and costs for service department B are allocated based on total labor hours.
Required:
Using the direct method, allocate the service department costs for Horizon Company and calculate total costs for each of the production departments