Maintenance Department costs of $320,000 are allocated on the basis of budgeted

Question

Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:

Matince personal A B
Budg cost 32000 80000 160000 240000
Budg maint hours na 800 960 640
Number of employess 40 na 160 480

Using the step-down method, what amount of Maintenance Department cost will be allocated to Department B if the service department with the highest percentage of interdepartmental support service is allocated first?

Explanation / Answer

Utility costs increase at the same time that insurance costs increase. so 54%

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