Question

1. Veneer Company has two service departments and two producing departments. The number of employees in each department is:

Personnel	10
Cafeteria	25
Producing Department A	422
Producing Department B	133
	590

The department costs of the Personnel Department are allocated on a basis of the number of employees. If these costs are budgeted at $67,850 during a given period, the amount of cost allocated to Department B under the direct method would be:

2.

The Hsu Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $792,000 are allocated on the basis of machine hours. The Accounting Department's costs of $171,600 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $250,000 and $450,000, respectively.

	Maint	Acctg	A	B
Machine hours	590	100	3,600	360
Number of employees	2	2	8	4

What is the Maintenance Department's cost allocated to Department A using the direct method?

3 and 4:

The Hsu Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $489,600 are allocated on the basis of machine hours. The Accounting Department's costs of $122,400 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $210,000 and $410,000, respectively.

	Maint	Acctg	A	B
Machine hours	895	80	2,400	320
Number of employees	2	2	8	4

3. What is the Accounting Department's cost allocated to Department B using the direct method?

4. What is the Maintenance Department's cost allocated to Department B using the step method and assuming the Maintenance Department's costs are allocated first?

Answer 1

It is given that department costs of personnel department are allocated on basis of no of employees.

Cost allocated to department B

= 67,850 * 133/(422+133)

= 16,259.55

As per HomeworkLib I'm supposed to solve your first question.