PROBLEMS 1) 5 points Hanung Corp has two service departments, Maintenance and Pe

Question

PROBLEMS 1) 5 points Hanung Corp has two service departments, Maintenance and Personnel Department costs of $300,000 are allocated on the basis of budgeted maintenance hours. Personnel Department costs of $100,000 are allocated based on the nu Maintenance mber of employees. The costs of operating departments A and B are $160,000 and $240,000 respectively. Da follows: ta on budgeted maintenance-hours and number of employees are as Production Support Departments Departments Department A $300,000 $100,000 $160,0 $240,00 Maintenanc Personnel Department Budgeted costs 0 1.200 600 NA 200600 Budgeted maintenance- NA 800 ours Number of employees 50 a) Using the direct method, what amount of Maintenance Department cost allocated to Department B? b) Using the direct method, what amount of Personnel Department costs will be allocated to Department B?

Explanation / Answer

1.

Maintenance Cost allocated to Department B= (B’s maintenance Hours /Total maintenance hours) * Total maintenance cost

= [600/1800(600+1200)] * $300,000

Maintenance Cost allocated to Department B = $100,000

2.

Personal Dept. Cost allocated to Department B= (B’s Personal Dept. employees /Total Employee) * Total Personal Dept. cost

= [600/800(600+200)] * $100,000

Personal Dept. Cost allocated to Department B = $75,000

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