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In: Accounting

Alpha Manufacturing Corporation has two service departments, Custodial Services and Maintenance, and three production departments, Cutting,...

Alpha Manufacturing Corporation has two service departments, Custodial Services and Maintenance, and three production departments, Cutting, Milling, and Assembly. The company allocates the cost of Custodial Services on the basis of square footage and Maintenance on the basis of labor-hours. No distinction is made between variable and fixed costs. Budgeted operating data for the year just completed follow:

Service Departments Production Departments
Custodial Services Maintenance Cutting Milling Assembly
Budgeted costs before allocation $69,000 $57,000 $165,000 $120,000 $180,000
Square feet 47,000 65,000 10,000 44,000 26,000
Labor-hours 4,000 8,000 8,000

Required:

a. Prepare a schedule to allocate service department costs to the production departments by the direct method.

b. Prepare a schedule to allocate service department costs to the production departments by the step-down method, allocating Custodial Services first.

Solutions

Expert Solution

I hope my efforts will be fruitful to you

ekkarill92 answered 11 months ago
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