Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $ 350 comma 000 are allocated on the basis of budgeted maintenanceminushours. Personnel Department costs of $ 100 comma 000 are allocated based on the number of employees. The costs of operating departments A and B are $ 180 comma 000 and $ 270 comma 000, respectively. Data on budgeted maintenanceminushours and number of employees are as follows:

Question

Hanung Corp has two service departments, Maintenance and Personnel. Maintenance Department costs of $350,000 are allocated on the basis of budgeted maintenance-hours. Personnel Department costs of $100,000 are allocated based on the number of employees. The costs of operating departments A and B are $180,000 and $270,000, respectively. Data on budgeted maintenance-hours and number of employees are as follows:

Production Support Departments --- $350,000

Departments Maintenance --- $100,000

Department Personnel -- $180,000

Department A B Budgeted Costs $270,000

Budgeted maintenance-hours

NA

880

1230

680

Number of employees

60

NA

290

630

Using the direct method, what amount of Maintenance Department costs will be allocated to Department B? (Do not round any intermediary calculations.)

Maintenance Department costs allocated to Department B = $124,607

Explanation:

Given

Budgeted Maintenance-hours for Department A = 1230

Budgeted Maintenance-hours for Department B = 680

Total = 1230 + 680

Total = 1910

Total Maintenance Department Budgeted Cost = $350,000

Maintenance Department costs allocated to Department B

= 680 / 1910 * $350,000

= $238,000,000/1910

= $124,607

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