A. The Grey 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 2 8 4 What are the total service department costs allocated to Department A using the step method if the maintenance department costs are allocated first

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Explanation:

Allocation of service costs - Accounting

Particulars       Calculation   Maintenance  Dept A  Dept B  Total

Number of

employees           Given               2                 8           4            14

Cost to                                                                                           be allocated   $120,000 x 2/14  $17,142.86    

               $120,000 x 8/14              $68,571.43  

               $120,000 x 4/14                              $ 34,285.71$                

                                                                                     1,20,000.00

Allocation of service costs - Maintenance

Particulars  Calculation  Dept A  Dept B  Total

Machine hours  Given  2300  200  2500

Cost to be allocated  $317,142x 2300/2500  $ 2,91,771.43  

$317,142x 200/2500    $ 25,371.43  $ 3,17,142.86

Particulars  Maintenance  Accounting  Department A  Department B

Department cost before allocation  $   3,00,000.00  $   1,20,000.00  $   3,00,000.00  $ 5,00,000.00

Allocation:    

Accounting Department  $       17,142.86  $ -1,20,000.00  $      68,571.43  $      34,285.71

Balance  $   3,17,142.86  $                      -    $   3,68,571.43  $ 5,34,285.71

Maintenance Department  $ -3,17,142.86  $   2,91,771.43  $      25,371.43

Total Costs after allocation  $                      -    $   6,60,342.86  $ 5,59,657.14

B. The joint cost to be allocated to product X will be in the proportion of Net realizable value at the point of split off. Further total joint costs should be reduced by the revenue from by product Z.

1. avoid them

2. a talk with them

3. ask someone you trust

4. ignore

5. call police

answer; blank(1); autonomous; blank(2) a wlan controller-based architecture;