Question
Help Me Please!! The three service departments (indirect costs) are payroll, sales supervision and maintenance. The actual costs of these service departments are as follows:
Help Me Please!!
The three service departments (indirect costs) are payroll, sales supervision and maintenance. The actual costs of these service departments are as follows:
Payroll sales supervision Maintenance
salaries and wages $41,000 $80,000 $52,000
office supplies $3,500 $1,600 $400
supplies 0 $2,400 $7,500
the two operating departments and their statistics are as follows:
sq footage Number of employees net assets
machining 14,500 78 $420,000
Assembly 4,600 52 $280,000
a) if you allocate payroll department costs by number of employees then how much payroll cost is allocated to the machining department?
B) if you allocate maintenance department costs by square footage, how much of the maintenance cost will be allocated to the assembly department?
C) which of the following statements is true regarding allocating costs from the service departments to operating departments?
- the machining department manager would prefer allocating costs evenly between assembly and maching
- the machining department manager would prefer allocating sales supervision costs using net assets rather then square footage
- allocating payroll department costs using number of employees would not be a appropriate approach
- allocating maintenance cost based on square footage makes more sense than allocating based on the number of machines used in the operating department
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