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6. (20 pts). A Company has two service departments, Facilities and Human Resources, as well as two line departments, Machining and Assembly. Facilities Department
6. (20 pts). A Company has two service departments, Facilities and Human Resources, as well as two line departments, Machining and Assembly. Facilities Department costs are allocated based on square footage and Human Resources Department costs are allocated based on number of employees. The following data was available: Direct costs Square footage Number of employees Direct labor hours Facilities $210,000 Human Res. $180,000 1,000 2,000 30 20 Machining $76,000 4,000 60 Assembly $85,000 6,000 100 8,000 6,000 a) Use the direct method to allocate service department costs to line departments b) Use the step-down method to allocate service department costs to line departments. Start with facilities.
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