Question

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 0 330 170 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?

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Expert Solution

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

Personnel

Maintenance

Assembly

Machining

Service Department cost 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 Service Department cost allocated

$117,360

$110,640 [Answer]

--Working

Personnel

Maintenance

Assembly

Machining

Service Department cost 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


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