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Which of the following would be the most appropriate base for allocating the costs of the...

Which of the following would be the most appropriate base for allocating the costs of the maintenance department?

a.direct labor hours

b.square feet

c.machine hours

d.number of employees

Business   Accounting   
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Answer #1

Maintenance department is the service department which provides its services to other departments. Since the service department is not revenue generating, there is need to allocate the cost of service department to the revenue generating department.
The most appropriate base for allocating the cost of maintenance department should be machine hours, because machines requires maintenance and its directly depends on the working of machines. Hence Machine hrs should be used to allocate the cost of maintenance department to revenue generating departments.
Answer is C. MACHINE HOURS.

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