Figure 7

Service Departments Producing Departments

Personnel Maintenance Fabrication Assembly

Budgeted overhead $80,000 $144,000 $280,000 $320,000

Machine hours 24,000 16,000

Number of employees -- -- 30 50

a. Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours.

30. Refer to Figure 7. The amount of Personnel costs allocated to the Maintenance Department using the direct method would be

a

$8,889

b

$0

c

$10,000

d

$8,163

e

none of the answers

b. Refer to Figure 7. The amount of Personnel costs allocated to the Fabrication Department using the direct method would be

a

$50,000

b

$44,444

c

$30,000

d

$26,666

e

none of the above

c.

Refer to Figure 7. If the step method is used to allocate service-department costs starting with Personnel, the amount of Personnel costs allocated to the Fabrication Department would be, assuming the matienance department has 10 employees.

a

$44,444

b

$30,000

c

$26,667

d

$32,000

e

$10,000

d.

Refer to Figure 7. Using the step method, allocate service department costs starting with personnel (assume the the maitenance department has 10 employees). The amount of Maintenance costs allocated to the Fabrication Department would be

a

$91,734

b

$86,400

c

$44,444

d

$61,156

e

$40,000