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Find operating departments by the direct method

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Reference no: EM133045107

Delta Manufacturing Company has two Service Departments-Custodial Services and Maintenance-and three Production Departments-Cutting, Milling, and Assembly. Delta allocates the cost of Custodial Services on the basis of square metres and Maintenance on the basis of labour hours. Budgeted operating data for the year just completed follow:   

 

Service Departments

Production Departments

 

Custodial Services

Maintenance

Cutting

Milling

Assembly

Budgeted costs before allocation

$20,000

$8,000

$90,000

$50,000

$100,000

Square metres

1,000

10,500

5,000

17,000

13,000

Labour-hours

 

 

4,220

8,000

8,000

Required:

  • Allocate service department costs to operating departments by the direct method
  • Allocate service department costs to operating departments by the step method.

Reference no: EM133045107

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