Question

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			Personnel			Printing			Developing
Machine-hours		—			1,700			1,700			5,100
Labor-hours		500			—			500			3,500
Department direct costs	$	3,000		$	13,000		$	14,100		$	11,200

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
Total costs allocated	$0	$0	$0	$0

Answer 1

• Requirement asked

	Maintenance	Personnel	Printing	Developing
Service department costs	$3,000	$13,000	$14,100	$11,200
Maintenance (1700 + 1700 + 5100 = 8500)	($3,000)	$600	$600	$1,800
Personnel (500 + 3500 = 4000)		($13,600)	$1,700	$11,900
Total costs allocated	$0	$0	$16,400	$24,900

--Working

	Maintenance	Personnel	Printing	Developing
Service department costs	3000	13000	14100	11200
Maintenance (1700 + 1700 + 5100 = 8500)	-3000	=3000*1700/8500	=3000*1700/8500	=3000*5100/8500
Personnel (500 + 3500 = 4000)		=-13000-600	=13600*500/4000	=13600*3500/4000