Reference no: EM132661925
A company operates with two processing departments:
- Cutting department
- Assembly department.
The human resources and maintenance departments support the processing departments.
Budgeted costs for the support departments for the period are as follows:
Human resources Maintenance
Salaries and wages $ 105,000 $ 14,000
Direct costs 15,000 24,000
Depreciation 30,000 32,000
Total $ 150,000 $ 70,000
Costs are allocated to the processing departments based on the following activity levels:
Supplied by Human resources Maintenance Cutting Assembly
Human resources (employees) 15 25 175 200
Maintenance (square metres) 2,000 3,000 10,000 40,000
Problem 1: Using the step-down method, beginning with human resources, how much of the total support department costs should be allocated to assembly?
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