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?
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?