Solution-Allocate the service department costs

Allocate the service department costs

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Reference no: EM132736858

Problem - Midland Resources has two production departments (Fabrication and Assembly) and three service departments (Engineering, Administration, and Maintenance). During July, the following costs and service department usage ratios were recorded.

Supplying Department	Using Department
Supplying Department	Engineering	Administration	Maintenance	Fabrication	Assembly
Engineering	0	60%	0	20%	20%
Administration	15%	0	10%	50%	25%
Maintenance	0	30%	0	15%	55%
Direct cost	$48,000	$274,500	$45,000	$245,000	$80,000

Required - Allocate the service department costs to the two operating departments using the reciprocal method.

Reference no: EM132736858

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Allocate the service department costs

Reference no: EM132736858

Reference no: EM132736858

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