Question
Use the following information to answer question: Mammoth Mats has two service departments (maintenance and administration) and two operating departments (fabrication and assembly). Management uses
Use the following information to answer question: Mammoth Mats has two service departments (maintenance and administration) and two operating departments (fabrication and assembly). Management uses machine hours to allocate maintenance costs in each department and direct labor cost to allocate administration costs. The following data appear on the company records for the current period:
Maintenance | Administration | Fabrication | Assembly | |
Machine hours | ------ | 500 | 1,500 | 1,000 |
Direct labor cost | $5,000 | -------- | $10,000 | $10,000 |
Department direct costs | $20,000 | $30,000 | $40,000 | $60, |
If the reciprocal method is used, how much service cost will be allocated to the assembly department? (Round usage calculations to four decimal places.)
a. | $22,758 | |
b. | $23,000 | |
c. | $23,334 | |
d. | $26,206 | |
e. | None of the above |
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