Question
. Excalibur Manufacturing has two production departments, Fabrication and Assembly, and three service departments, Material Handling, Power Generation, and Accounting. The following table shows the
. Excalibur Manufacturing has two production departments, Fabrication and Assembly, and three service departments, Material Handling, Power Generation, and Accounting. The following table shows the costs incurred by each service department as well as the usage of their cost allocation bases among all departments. Material Handling costs are allocated by pounds of material used, Power Generation costs are allocated by Kilowatt-hours (Kwhr), and Accounting costs are allocated by hours spent in the accounting department on each department.
Material Power
Handling Generation Accounting Fabrication Assembly
Traceable costs $10,000 $4,000 $12,000
Pounds of material 30 20 0 50 30
Power used (Kw/hr) 750 150 600 450 150
Accounting hours 100 100 50 300 100
- Allocate service department costs to operating departments using the direct method.
- Allocate service department costs to operating departments using the reciprocal method.
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