University printers has two service departments (maintenance and personnel) and two operating departments (printing and developing). management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. the following data appear in the company records for the current period: maintenance personnel printing developing machine-hours — 1,500 1,500 4,500 labor-hours 500 — 500 3,500 department direct costs $ 4,800 $ 14,800 $ 16,000 $ 13,300 required: allocate the service department costs using the step method, starting with the maintenance department. (negative amounts should be indicated by a minus sign. do not round intermediate calculations.)

Explanation:

First we allowace mainenance, so we distribute their cost according to the machine hours

1500 + 1500 + 4500 = 7500 total machine hours

personnel    cuota = 1500/7500 x 4,800

printing        cuota = 1500/7500 x 4,800

developing  cuota = 4500/7500 x 4,800

The we add it to the department

We do the same for personnel:

500 printing + 3,500 developing = 4,000

And now we distribute for the two operating department

printing        cuota = 500/4,000   x  15,760

developing  cuota = 3,500/4,000 x  15,760

Notice we use the cost of personnel after allocate a portion of maintenance into it!

Last we add the cost for the total of the operating department

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the answer is: guns or butter

hope i

-lavira : )