Question
Lisa's Automotive Company has two support departments, Personnel and Maintenance. The Maintenance Department costs of $80,000 are allocated on the basis of standard service hours
Lisa's Automotive Company has two support departments, Personnel and Maintenance. The Maintenance Department costs of $80,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $20,000 are allocated based on the number of employees. Costs of Departments A and B are $40,000 and $60,000, respectively.
Data on standard service hours and number of employees are as follows:
Maintenance Dept. | Personnel Dept. | Production Dept. A | Production Dept. B | |
---|---|---|---|---|
Standard service hours used | 200 | 200 | 240 | 160 |
Number of employees | 10 | 20 | 40 | 120 |
What is the cost of the Maintenance Department allocated to Department B using the step-down method if the support department with the highest percentage of interdepartmental service to the other support department is allocated first?
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