The Hsu Manufacturing Company has two service departments: Maintenance and Accou

Question

The Hsu Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of 588,300 are allocated on the basis of machine hours. The Accounting Department's costs of $134,400 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $220,000 and $420,000, respectively Maint 690 Acctg 85 Machife hours Number of employees 2,850 330 What is the Maintenance Department's cost allocated to Department A using the direct method? O $527250 O $343.250 O $637650 $481,250

Explanation / Answer

Total machine hours for allocation to department A and B = 2850 + 330 = 3180

Allocation rate of maintenance cost per machine hour = $588300/ 3180 = $185

Maintenance cost allocated to department A = $185 x 2850 = $527250

The first option is correct.

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