Boston Box Company has two service departments, maintenance and grounds, and two production departments, fabricating and assembly.
Question:
Boston Box Company has two service departments, maintenance and grounds, and two production departments, fabricating and assembly. Management has decided to allocate maintenance costs on the basis of machine hours used by the departments and grounds costs on the basis of square feet occupied by the departments. The following data appear in the company's records for last year:
Required(a) Allocate service department costs to the production departments using the direct method.(b) Allocate service department costs to the production departments using the sequential method, assuming that the costs of the service department incurring the greatest cost are allocated first.(c) Allocate service department costs to the production departments using the reciprocal method.
Step by Step Answer:
Management Accounting Information for Decision-Making and Strategy Execution
ISBN: 978-0137024971
6th Edition
Authors: Anthony A. Atkinson, Robert S. Kaplan, Ella Mae Matsumura, S. Mark Young