Question
Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $350,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $180,000 and $270,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
Production Support Departments --- $350,000
Departments Maintenance --- $100,000
Department Personnel -- $180,000
Department A B Budgeted Costs $270,000
Budgeted maintenance-hours
NA
880
1230
680
Number of employees
60
NA
290
630
Using the direct method, what amount of Maintenance Department costs will be allocated to Department B? (Do not round any intermediary calculations.)
Answer:
Maintenance Department costs allocated to Department B = $124,607
Explanation:
Given
Budgeted Maintenance-hours for Department A = 1230
Budgeted Maintenance-hours for Department B = 680
Total = 1230 + 680
Total = 1910
Total Maintenance Department Budgeted Cost = $350,000
Maintenance Department costs allocated to Department B
= 680 / 1910 * $350,000
= $238,000,000/1910
= $124,607
Answer:
The question is incomplete but I have the remaining part of it in the word document attached.
Total cost of department A after apportioning the service department costs to production costs gives $398,552.03,while that of B amounted to $501,447.96
Since the service departments are mere support functions,their costs should be apportioned to production departments(A and B).
Explanation:
Find attached spreadsheet for detailed calculations
