29 November, 15:17

# The Hsu Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of \$728,850 are allocated on the basis of machine hours. The Accounting Department's costs of \$148,800 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are \$280,000 and \$480,000, respectively. Maint Acctg A B Machine hours 495 115 3,000 390 Number of employees 2 2 8 4 What is the Maintenance Department's cost allocated to Department A using the direct method

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1. 29 November, 16:22
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Explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the Maintenance Department's cost allocated to Department A using the direct method are as follows:

Cost allocated = Maintenance Department's costs * Machine hours of Dept. A : (Machine hours of Dept. A + Machine hours of Dept. B)

By putting the value, we get

Cost Allocated = \$728,850 * 3,000 : (3,000 + 390)

= \$728,850 * 3,000 : 3,390

= \$645,000