Russell Manufacturing Company has a maintenance department and a supplies depart

Question

Russell Manufacturing Company has a maintenance department and a supplies department that supports two production departments. The budgeted overhead of the maintenance department is $90,000 and is allocated to production departments based on labor hours. The budgeted overhead of the supplies department is $60,000 and is allocated to production departments based on number of employees. Given the following information:



b) Under the sequential allocation method, what is the amount allocated to Production Department A from the supplies department?

Explanation / Answer

Budgeted MD=$90,000 Budgeted SD=$60,000 Under direct allocation method the amount will be: 90000+(90000-60000)=120000

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