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Problem - Davis Snowflake & Co. produces Christmas stockings in its Cutting and Sewing departments. The Maintenance and Security departments support the production of the stockings. Costs from the Maintenance Department are allocated based on machine hours, and costs from the Security Department are allocated based on asset value. Information about each department is provided in the following table:
Maintenance Department
Security Department
Cutting Department
Sewing Department
Machine hours
800
2,000
7,200
10,800
Asset value
$2,000
$1,670
$2,500
$5,500
Department cost
$36,000
$16,000
$64,000
$82,000
Required - Find total cost of each production department after allocating all support department costs to the production departments using the reciprocal services method.
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