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George Company has two service departments, Maintenance Department and Personnel Department, and two producing departments, Y and Z. The Maintenance Department costs of $120,000 are

George Company has two service departments, Maintenance Department and Personnel Department, and two producing departments, Y and Z. The Maintenance Department costs of $120,000 are allocated on the basis of standard service used. The Personnel Department costs of $18,000 are allocated on the basis of number of employees. The direct costs of Departments Y and Z are $144,000 and $240,000, respectively. Data on standard service-hours and number of employees are as follows:

Maint. Dept.

Person. Dept.

Dept. Y

Dept. Z

Standard service hours used

200

150

1,200

600

Number of employees

25

50

75

75

Direct labor-hours

250

250

1,000

500

Calculate the total overhead costs associated with Department Z after allocating the Maintenance and Personnel Departments using the direct method.

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