A company has two support departments, Power and Maintenance, and two production departments, Machining and Assembly. All
Question:
A company has two support departments, Power and Maintenance, and two production departments, Machining and Assembly. All costs are regarded as strictly variable. For September, the following information is available: Support Departments Production Departments Power Maintenance Machining Assembly Direct costs $62,500 $40,000 $25,000 $15,000 Actual activity: Kilowatt hrs. 50,000 150,000 50,000 Maintenance hours 250 1,125 1,125 Question Assume the company uses the sequential or step method for allocating support department costs to production departments. The company begins with the support department that receives the least support from other support departments. What dollar amount of Power Department costs will be allocated to the Maintenance Department for September?