Use the Direct Method to allocate Service Department Costs to the Operating Departments based on number...

Use the Direct Method to allocate Service Department Costs to the Operating Departments based on number (percentage) of employees.

Attacking Dept = 110 employees

Shark Dept = 135 employees

	Service Dept. Maintenance	Service Dept. Cafeteria	Service Dept. Custodial	Operating Dept. Painting	Operating Dept. Welding
Dept costs before allocation	$200,000	110,000	275,000	500,000	850,000
Maintenance
Cafeteria
Custodial
Total after allocation

Solutions

Expert Solution

Calculation of bases of allocation
	Painting dept	Operating dept	Total
	110	135	245
% no. of employees	45%	55%	100%

	Allocation of costs
	Service dept	Operating dept
	Maintenance	Cafeteria	Custodial	Painting	Welding
	$ 200,000	$ 110,000	$ 275,000	$ 500,000	$ 850,000
Allocation of costs
Maintenance	$ (200,000)			$ 89,796	$ 110,204
Cafeteria		$(110,000)		$ 49,388	$ 60,612
Custodial			$ (275,000)	$ 123,469	$ 151,531
Total after allocation	$ -	$ -	$ -	$ 762,653	$1,172,347

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ekkarill92 answered 1 year ago

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