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In: Accounting

Andy Corp. has two service departments and two operating departments. The company allocates service departmental costs...

Andy Corp. has two service departments and two operating departments. The company allocates service departmental costs to operating departments using the step-down method. Operating data for these departments for last year are as follows:

Service Departments

Operating Departments

Personnel

Maintenance

Assembly

Machining

Departmental costs

$144,000

$84,000

$12,000

$34,000

Number of employees

 35 30 90 60

Machine-hours

 0 0 210 290

Personnel costs are allocated first on the basis of number of employees and Maintenance costs are allocated second on the basis of machine-hours.

Q:) What is the total service department costs allocated to Machining Department?

A:) $ ______?

Solutions

Expert Solution

  • Requirement:
    Total Service Department cost allocated to Machining Department = $ 48000 + 62640 = $ 110,640

Personnel

Maintenance

Assembly

Machining

Departmental cost

$144,000

$84,000

$12,000

$34,000

Allocation:

Personnel (30 + 90+60 = 180)

($144,000)

$24,000

$72,000

$48,000

Maintenance ( 210 + 290 = 500)

($108,000)

$45,360

$62,640

Total Cost after allocation

$0

$0

$129,360

$144,640

--Working

Personnel

Maintenance

Assembly

Machining

Departmental cost

144000

84000

12000

34000

Allocation:

Personnel (30 + 90+60 = 180)

-144000

=144000*30/180

=144000*90/180

=144000*60/180

Maintenance ( 210 + 290 = 500)

=-84000-24000

=108000*210/500

=108000*290/500

ekkarill92 answered 2 years ago
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