Question

Annapolis Company has two service departments (Computer Operations & Maintenance Services). Annapolis has two production departments (Mixing Department & Packaging Department.) Annapolis uses a step allocation method where the Computer Operations Department is allocated to all departments and Maintenance Services is allocated to the production departments.  All allocations are based on total employees. Computer Operations has costs of $160,000 and Maintenance Services has costs of $165,000 before any allocations. What amount of Maintenance Services total cost is allocated to the Mixing Department? (round to closest whole dollar) Employees are:

            Computer Operations 3

            Maintenance Services 4

Mixing Department 5

Packaging Department 8

Answer 1

Answer:

$ 77,941

Workings:

			Computer	Maintenance	Mixing	Packaging
Particulars			Operations	Services	Department	Department
Costs before allocation			$        1,60,000	$        1,65,000
Allocating cost of:
Computer Operations			$       -1,60,000	$           37,647	$      47,059	$      75,294
Balance			$                    -	$        2,02,647	$      47,059	$      75,294
Allocating cost of:
Maintenance Services				$       -2,02,647	$      77,941	$   1,24,706
Balance				$                    -	$   1,25,000	$   2,00,000