Reference no: EM132735832
University Printers has two service departments (Maintenance and Personnel) and two operating departments (Printing and Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each.
The following data appear in the company records for the current period:
Maintenance Personnel Printing Developing
Machine-hours - 1,000 1,000 3,000
Labor-hours 500 - 500 2,000
Department direct costs $5,000 $12,000 $15,000 $10,000
Required:
Problem 1: Allocate the service department costs using the reciprocal method. (Matrix algebra is not required because there are only two service departments.)
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