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		700			—			700			2,800
Department direct costs	$	2,400		$	12,400		$	14,100		$	11,000

Required:

Use the direct method to allocate these service department costs to the operating departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.)

	maintenance	personnel	printing	developing
service department costs	?	?	?	?
maintenance allocation	?	?	?	?
personnel allocation	?	?	?	?
total costs allocated

Answer 1

Answer
Using the direct method to allocate these service department costs to the operating departments.:
Particulars	Maintenance	Personnel	Printing	Developing
Department direct costs	$ 2,400	$ 12,400	$14,100	$ 11,000
service department costs:
Maintenance allocation (1700:5100)	$-2,400		$     600	$   1,800
Personnel allocation (700:2800)		$-12,400	$ 2,480	$   9,920
Total costs allocated	$       -	$         -	$17,180	$ 22,720