Golden Leaves Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $30,000 are allocated on the basis of standard service used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows: $$\begin{array} { l r r r r }
& \text { MD } & \text { PD } & \text { P1 } & { \text { P2 } } \
\text { Standard service hours used } & 100 & 50 & 300 & 150 \
\text { Number of employees } & 10 & 20 & 90 & 90 \
\text { Direct labor hours } & 50 & 50 & 250 & 250
\end{array}$$
What is the combined total department costs for the producing departments after allocation of the support departments?

Question

Golden Leaves Company has two support departments, Maintenance Department (MD) and Personnel Department (PD), and two producing departments, P1 and P2. The Maintenance Department costs of $30,000 are allocated on the basis of standard service used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments P1 and P2 are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows: $$\begin{array} { l r r r r } 
& \text { MD } & \text { PD } & \text { P1 } & { \text { P2 } } \
\text { Standard service hours used } & 100 & 50 & 300 & 150 \
\text { Number of employees } & 10 & 20 & 90 & 90 \
\text { Direct labor hours } & 50 & 50 & 250 & 250
\end{array}$$
What is the combined total department costs for the producing departments after allocation of the support departments?

Quizplus · Accepted Answer

The combined total department costs for the producing departments after allocation of the support departments is calculated by first allocating the costs of the Maintenance Department (MD) and Personnel Department (PD) based on the given bases and then adding these allocated costs to the direct costs of Departments P1 and P2.1. Allocation of Maintenance Department (MD) costs ($30,000):   - Total standard service hours used = 100 (MD) + 50 (PD) + 300 (P1) + 150 (P2) = 600 hours   - Allocation to P1: (300/600) * $30,000 = $15,000   - Allocation to P2: (150/600) * $30,000 = $7,5002. Allocation of Personnel Department (PD) costs ($4,500):   - Total number of employees = 10 (MD) + 20 (PD) + 90 (P1) + 90 (P2) = 210 employees   - Allocation to P1: (90/210) * $4,500 = $1,928.57 (approximately)   - Allocation to P2: (90/210) * $4,500 = $1,928.57 (approximately)3. Adding allocated costs to direct costs:   - Total costs for P1: $9,000 (direct) + $15,000 (MD allocation) + $1,928.57 (PD allocation) ≈ $25,928.57   - Total costs for P2: $15,000 (direct) + $7,500 (MD allocation) + $1,928.57 (PD allocation) ≈ $24,428.574. Combined total department costs for P1 and P2: ≈ $25,928.57 + $24,428.57 = $50,357.14Given the options, it seems there might have been a mistake in the calculation or interpretation of the options provided. Based on the calculation process outlined, none of the options directly match the calculated total. However, the closest and correct approach to calculating the combined total department costs after allocation would typically follow the steps outlined. It's important to ensure accurate calculations and to check for any rounding or allocation method errors.

Golden Leaves Company Has Two Support Departments, Maintenance Department (MD)