Question
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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