Question
Freezo Proprietary Limited has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs
Freezo Proprietary Limited has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of 12,058 are allocated on the basis of standard service used. The Personnel Department costs of 3,709 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are R9 000 and R15 000, respectively. Data on standard service hours and number of employees are as follows: MD PD P1 P2 Standard service hours 100 50 342 172 Number of employees 10 20 151 137 Direct labour hours 50 50 250 250 Using the direct method, calculate the cost of the support departments allocated to Department P1.
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