University Printers has two service departments (Maintenance and Personnel) and

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: Maintenance Personnel Printing Developing Labor-hours Department direct costs 1,800,800 650 $4,00014000 $15,90 5,400 2,600 650 Required Use the direct method to allocate these service department costs to the operating departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) Maintenance Personnel Printing Developing Service department costs Maintenance allocation Personnel allocation Total costs allocated

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Maintenance Personnel Printing Developing Service Departmetn Cost 4000 14000 15900 12600 Maintenance Allocation Working-1 -4000 1000 3000 Personnel Allcation Working-2 -14000 2800 11200 Total Cost 0 0 19700 26800 Working-1 Maintenance Allocation: Printing Developing Total Machine Hour 1800 5400 7200 Maintenance Allocation 4000*1800/7200 1000 4000*5400/7200 3000 Working-2 Personnel Allocation Printing Developing Total Labour Hour 650 2600 3250 Maintenance Allocation 14000*650/3250 2800 14000*2600/3250 11200

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