The Maintenance Department has been servicing Bondi Production for four years.Beginning next year,the company is adding a Scrap-Processing Department to recycle the materials from Bondi Production.As a result,maintenance costs are expected to increase from $480 000 per year to $500 000 per year.The Scrap-Processing Department will use 25% of the maintenance efforts.
Required:
a.Using the stand-alone cost-allocation method,identify the amount of maintenance cost that will be allocated to Bondi Production and the Scrap-Processing Department next year.
b.Using the incremental cost-allocation method,identify the amount of maintenance cost that will be allocated to Bondi Production and the Scrap-Processing Department next year.
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The Answer of The Maintenance Department has been servicing Bondi Production for four years.Beginning next year,the company is adding a Scrap-Processing Department to recycle the materials from Bondi Production.As a result,maintenance costs are expected to increase from $480 000 per year to $500 000 per year.The Scrap-Processing Department will use 25% of the maintenance efforts.
Required:
a.Using the stand-alone cost-allocation method,identify the amount of maintenance cost that will be allocated to Bondi Production and the Scrap-Processing Department next year.
b.Using the incremental cost-allocation method,identify the amount of maintenance cost that will be allocated to Bondi Production and the Scrap-Processing Department next year.
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The Maintenance Department Has Been Servicing Bondi Production for Four