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Problem - The Hsu Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $300,000 are allocated on the basis of machine hours. The Accounting Department's costs of $120,000 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $300,000 and $500,000, respectively.
Maintenance
Accounting
A
B
Machine hours
480
20
2,300
200
Number of employees
2
8
4
Required - What is the Accounting Department's cost allocated to Department B using the direct method?
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