University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing andDeveloping). Management has decided to allocate maintenance costs on the basis of machine-hours in each department andpersonnel costs on the basis of labor-hours worked by the employees in each.The following data appear in the company records for the current period:MaintenanceMachine-hoursLabor-hoursDepartment direct costsPersonnel1,200Printing1,600400Deve loping3,2002,000$10,500600$2,100$12,000$13,600Required:Allocate the service department costs using the step method, starting with the Maintenance Department. (Negative amounts shouldbe indicated by a minus sign. Do not round intermediate calculations.)MaintenancePersonnelPrintingDevelopingService department costsMaintenancePersonnel斯0.2.0.Total costs allocated%24

Answered: University Printers has two service…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter4: Accounting For Factory Overhead

Section: Chapter Questions

Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...

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University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and
Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and
personnel costs on the basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current period:
Maintenance
Machine-hours
Labor-hours
Department direct costs
Personnel
1,200
Printing
1,600
400
Deve loping
3,200
2,000
$10,500
600
$2,100
$12,000
$13,600
Required:
Allocate the service department costs using the step method, starting with the Maintenance Department. (Negative amounts should
be indicated by a minus sign. Do not round intermediate calculations.)
Maintenance
Personnel
Printing
Developing
Service department costs
Maintenance
Personnel
斯
0.
2.
0.
Total costs allocated
%24

Expert Solution

Step 1Basic Information

The question is related to the Allocation of services department overheads to operating department by using step method. This method allocates service costs to the operating departments and other service departments in a sequential process. The sequence of allocation generally starts with the service department that has incurred the greatest costs.

The details are given as under

Service Departments

1.Maintainance Direct Cost = $2100 alloacted on the basis of Machine hours

2. Personnel Direct Cost = $12000 allocated on the basis of labor hours.

Operating Departments

1.Printing Direct Cost = $13600

2. Developing Direct Cost = $10500

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