Question
The RAH Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $305,000 are allocated on the basis of machine hours.
The RAH Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $305,000 are allocated on the basis of machine hours. The Accounting Department's costs of $125,000 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $305,000 and $505,000, respectively.
Maint Acctg A B
Machine hours 490 25 2,400 250
Number of employees 7 7 13 9
What is the Maintenance Department's cost allocated to Department B using the step method and assuming the Maintenance Department's costs are allocated first?
a) $278,500.
b) $232,500.
c) $324,500.
d) $28,505.
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