Reference no: EM13550273

Cost Allocation: Direct Method       

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	$15,000	$36,000	$45,000	$30,000

Required

Use the direct method to allocate these service department costs to the operating departments.