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PART 3 A company has 2 service departments, Maintenance and Administration, and 2 operating departments (Department 1 and 2 for simplicity). The costs of the
PART 3 A company has 2 service departments, Maintenance and Administration, and 2 operating departments (Department 1 and 2 for simplicity). The costs of the maintenance department are allocated based on the machine-hours used. For the administration department, the cost allocation is based on the number of staff. The following information is provided: SERVICE DEPARTMENTS PRODUCTION DEPARTMENTS Maintenance Administration Assembly Finishing Costs $ 8.000 $ 4,000 $ 32,000 $36.000 Machine hours used 1,000 hours 2,000 hours 1,500 hours 2,500 hours # of staff 100 staff 200 staff 250 staff 150 staff Required: Allocate the service departments cost to the production departments using the reciprocal method
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