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In: Accounting

Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and...

Bens Corporation has three service departments (Repairs, HR, and IT) and two production departments (M1 and M2). The following usage data for each of the service departments for the previous period follow.

Repairs HR IT M1 M2
Repairs — 0 % 0 % 40 % 60 %
HR 10 % — 20 % 35 % 35 %
IT 0 % 10 % — 20 % 70 %

The direct costs of the service departments in the previous period were $24,000 for Repairs, $43,600 for HR, and $54,000 for IT.

Required:

Use the direct method to allocate the service department costs to the production departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)

Please show your work.

Solutions

Expert Solution

From Repairs HR IT M1 M2
Department cost $              24,000 $      43,600 $       54,000 0 0
Repairs (40 : 60) $            -24,000 $            9,600 $       14,400
HR (35 : 35) $     -43,600 $          21,800 $       21,800
IT (20 : 70) $     -54,000 $          12,000 $       42,000
Total Cost $                       -   $                -   $                -   $          43,400 $       78,200

ekkarill92 answered 2 years ago
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