Question

Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $300,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $170,000 are allocated based on the number of employees. The costs of operating departments A and B are $188,000 and $282,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:
Production
Support Departments Departments  

	Maintenance Department	Personnel Department	A	B
Budgeted costs	$300,000	$170,000	$188,000	$282,000
Budgeted maintenance-hours	NA	860	1280	600
Number of employees	100	NA	250	600

Using the direct method, what amount of Personnel Department costs will be allocated to Department B? (Do not round any intermediary calculations.)

		$50,000
		$120,000
		$44,737
		$107,368

Answer 1

Answer :-

The answer is $120,000 .

Personnel Department costs will be allocated to Department B is $120,000 .

Explanation :-

	Support Departments			Production Departments
	Maintenance Department		Personnel Department	A	B
Budgeted costs	$300,000		$170,000	$188,000	$282,000
Personnel Department			$170,000	= [ $170,000 * 250 ] / [ 250 + 600 ] = 42,500,000 / 850 = $50,000	= [ $170,000 * 600 ] / [ 250 + 600 ] = 102,000 / 850 = $120,000