Diane's Pottery Manufacturing Company has two support departments, Maintenance Department and Personnel Department, and two producing departments, X and Y. The Maintenance Department costs of $30,000 are allocated on the basis of standard service hours used. The Personnel Department costs of $4,500 are allocated on the basis of number of employees. The direct costs of Departments X and Y are $9,000 and $15,000, respectively. Data on standard service hours and number of employees are as follows: $\begin{array}{lcccc}
&\text { Maint. } & \text { Person. } & \text { Dept. } & \text { Dept. } \
&\text { Dest. } & \text { Dept. } & \underline{X} & \underline{Y}\
\text { Standard service hours used } & 100 & 75 & 600 & 300 \
\text { Number of employees } & 50 & 100 & 150 & 150 \
\text { Direct labor hours } & 125 & 125 & 500 & 250
\end{array}$
What are the total overhead costs associated with Department X after allocating the Maintenance and Personnel Departments using the direct method?

Question

Quizplus · Accepted Answer

The total overhead costs associated with Department X after allocating the Maintenance and Personnel Departments using the direct method are calculated as follows:1. Allocation of Maintenance Department costs ($30,000) based on standard service hours used:- Total standard service hours = 100 (Maint.) + 75 (Person.) + 600 (X) + 300 (Y) = 1075 hours- Department X's share = (600 / 1075) * $30,000 = $16,744.19 (approximately)2. Allocation of Personnel Department costs ($4,500) based on the number of employees:- Total number of employees = 50 (Maint.) + 100 (Person.) + 150 (X) + 150 (Y) = 450 employees- Department X's share = (150 / 450) * $4,500 = $1,5003. Adding the allocated overhead costs to Department X's direct costs:- Direct costs of Department X = $9,000- Allocated Maintenance costs = $16,744.19- Allocated Personnel costs = $1,500- Total overhead costs for Department X = $9,000 + $16,744.19 + $1,500 ≈ $27,244.19The correct answer choice closest to the calculated total is not provided in the options, indicating a possible mistake in the calculation or interpretation of the question. However, based on the provided options and the methodology for allocating costs, the intention seems to aim for an understanding of how to allocate overhead costs using the direct method. Given the discrepancy, let's correct the approach:1. Correct Allocation of Maintenance Department costs:- Department X's share = (600 / (600 + 300)) * $30,000 = (600 / 900) * $30,000 = 2/3 * $30,000 = $20,0002. Correct Allocation of Personnel Department costs:- Department X's share = (150 / (150 + 150)) * $4,500 = (150 / 300) * $4,500 = 1/2 * $4,500 = $2,2503. Correct Total overhead costs for Department X:- Direct costs of Department X = $9,000- Correctly allocated Maintenance costs = $20,000- Correctly allocated Personnel costs = $2,250- Correct total overhead costs for Department X = $9,000 + $20,000 + $2,250 = $31,250Therefore, the correct choice is A, based on the corrected calculation.

Diane's Pottery Manufacturing Company Has Two Support Departments, Maintenance Department