Question
Hinson Corporation has two production departments machining and finishing. The production departments are supported by two service departments scheduling and purchasing. Hinson has the following
Hinson Corporation has two production departments machining and finishing. The production departments are supported by two service departments scheduling and purchasing. Hinson has the following labor hours devoted by each of the service departments to the other departments. Total Labor Hours Used Purchasing Scheduling Machining Finishing Purchasing 15,000 45,000 65,000 Scheduling 16,000 48,000 36,000 The direct costs incurred in each department are as follows: Department Costs Purchasing $155,000 Scheduling 275,000 Machining 415,000 Finishing 480,000 Total $1,325,000 Required a. Calculate the total costs in each production department after allocating the service department costs to the production departments using the: i. Direct method. ii. Step-down method (start with Purchasing). iii. Reciprocal method.
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