Calculate amounts to be allocated to production departments

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Reference no: EM131578453

Question -

Quantum currently allocates their repair and utility dollars to their assembly, fabricating, and finishing department using the direct method of service center cost allocation. Repair dollars are allocated using direct labor hours and utility dollars are allocated using square footage.

 

DLH Repair

Sq. Ft. Utilities

Assembly

Fabricating

Finishing

Total

Cost

$8,000,000

$10,000,000

$4,000,000

$3,500,000

$4,500,000

$30,000,000

Repair

5,000

15,000

6,000

10,000

9,000

45,000

Utilities

7,000

10,000

25,000

30,000

45,000

117,000

a) Calculate the amounts to be allocated to the production departments using the direct method.

b) Calculate the amounts to be allocated to the production departments using the step method.

c) Write a memo to the President explaining the differences in the results.

Reference no: EM131578453

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