Marcos Company has two service departments, Maintenance and Personnel, as well as two production departments, Mixing and Finishing.Maintenance costs are allocated
Based on square footage while personnel costs are allocated based on number of
Employees.The following information has been gathered for the current year: $\begin{array}{lrrrr}&\text { Maintenance}&\text { Personnel}&\text { Mixing }&\text {Finishing }\\hline
\text { Direct dept. costs } & \$ 50,400 & \$ 33,600 & \$ 42,000 & \$ 70,000 \
\text { Square footage } & 1,600 & 800 & 3,200 & 2,400 \
\text { Number of employees } & 16 & 24 & 48 & 64
\end{array}$ If the direct method is used to allocate costs, then the total cost of the Maintenance Department after the Personnel Department cost allocation would be:

Question

Quizplus · Accepted Answer

The direct method allocates service department costs directly to production departments without allocating costs between service departments. Therefore, the Maintenance Department's cost remains $50,400 after the Personnel Department cost allocation.

Marcos Company Has Two Service Departments, Maintenance and Personnel, as Well