Lincoln Corporation
Lincoln Corporation distributes its service department overhead costs directly to producing departments without allocation to the other service departments.Information for January is presented here.
$\text {\underline{ Mantenance} }$ $\text {\underline{ Utilities} }$
$\begin{array}{lll}
\text { Overhead costsincurred } & \$ 18,700 & \$ 9,000 \
\text { Service provided to: } & \
\text { Maintenance Dept. } && 10 \% \
\text { Utilities Dept. } & 20 \% &\
\text { Producing Dept. A } & 40 \% &30 \%\
\text { Producing Dept. B } & 40 \% & 60 \%
\end{array}$

Refer to Lincoln Corporation.Using the step method,how much of Lincoln Corporation's Utilities Department cost is allocated between Departments A and B?

Question

Lincoln Corporation
Lincoln Corporation distributes its service department overhead costs directly to producing departments without allocation to the other service departments.Information for January is presented here.
                                                    $\text {\underline{ Mantenance} }$ $\text {\underline{ Utilities} }$
$\begin{array}{lll}
\text { Overhead costsincurred } & \$ 18,700 & \$ 9,000 \
\text { Service provided to: } & \
\text { Maintenance Dept. }  && 10 \% \
\text { Utilities Dept. } & 20 \% &\
\text { Producing Dept. A } & 40 \% &30 \%\
\text { Producing Dept. B } & 40 \% & 60 \%
\end{array}$

Refer to Lincoln Corporation.Using the step method,how much of Lincoln Corporation's Utilities Department cost is allocated between Departments A and B?

Quizplus · Accepted Answer

First, allocate the Maintenance Department costs, including its own costs plus the Utilities Department's share. Then, allocate the Utilities Department costs, including the adjusted total after receiving Maintenance's allocation. Maintenance's overhead is $18,700. Utilities Department receives 20% of this, which is $3,740. Thus, the total Utilities cost before allocation is $9,000 + $3,740 = $12,740. This entire amount is then allocated to Departments A and B based on their respective percentages (30% and 60%), but the question asks for the total amount allocated from Utilities, not the breakdown, so the correct answer is $12,740.

Lincoln Corporation Lincoln Corporation Distributes Its Service Department Overhead Costs Mantenance‾ \text {\underline{ Mantenance} } Mantenance​

Lincoln Corporation
Lincoln Corporation Distributes Its Service Department Overhead Costs $\text {\underline{ Mantenance} }$