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[answered] Mike's Battery Company has two service departments, Ma


Mike's Battery Company has two service departments, Maintenance and Personnel. Maintenance Department costs of $320,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $80,000 are allocated based on the number of employees. The costs of operating departments A and B are $160,000 and $240,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:

Support Departments

Production Departments

Maintenance Department

Personnel Department

A

B

Budgeted costs

$320,000

$80,000

$160,000

$240,000

Budgeted maintenance-hours

NA

800

960

640

Number of employees

40

NA

160

480

Using the direct method, what amount of Maintenance Department costs will be allocated to Department B? (10 points)

Using the step-down method, what amount of Maintenance Department cost will be allocated to Department B if the service department with the highest percentage of interdepartmental support service is allocated first? (10 points)

 


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