Answered

The Hsu Manufacturing Company has two service departments: Maintenance and Accounting. The Maintenance Department's costs of $728,850 are allocated on the basis of machine hours. The Accounting Department's costs of $148,800 are allocated on the basis of the number of employees within a specific department. The direct departmental costs for A and B are $280,000 and $480,000, respectively. Maint Acctg A B Machine hours 495 115 3,000 390 Number of employees 2 2 8 4 What is the Maintenance Department's cost allocated to Department A using the direct method

Answer :

Answer:

The correct answer is $645,000.

Explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the Maintenance Department's cost allocated to Department A using the direct method are as follows:

Cost allocated = Maintenance Department's costs × Machine hours of Dept. A ÷ ( Machine hours of Dept. A  + Machine hours of Dept. B )

By putting the value, we get

Cost Allocated = $728,850 × 3,000 ÷ ( 3,000 + 390)

= $728,850 × 3,000 ÷ 3,390

= $645,000

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